Preamble

The House met at half-past 
Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

ROYAL ASSENT

Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

1. Consolidated Fund (No. 2) Act 1978
2. Cunninghame District Council Order Confirmation Act 1978
3. Monklands District Council Order Confirmation Act 1978
4. District Council of Renfrew Order Confirmation Act 1978
5. British Railways Act 1978

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Vineyards

Mr. MacGregor: asked the Minister of Agriculture, Fisheries and Food whether, in order to remove current uncertainties, he will take action to ensure that United Kingdom vineyards and buildings thereon used in connection with the production of wine are defined as being for agricultural purposes.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): The definition of "agriculture" in section 109 of the Agriculture Act 1947 includes the production of crops but excludes their processing and distribution. My right hon. Friend the Minister has no plans to extend the definition to wine-making at present.

Mr. MacGregor: Is the Minister aware that this small but growing industry faces considerable uncertainty because of the threat that the buildings involved will be fully rated and that, because of the slim profit margins, the extra cost that this would entail may well force some growers out of business altogether? Will he therefore reconsider, with a view to so ruling, that the whole process is an agricultural one, as it is in the rest of the EEC, and so remove this uncertainty?

Mr. Strang: I will certainly have a look at the point raised by the hon. Gentleman, because we want to encourage the small English viticulture industry. He will, though, wish to bear in mind that at present we do not give any grants towards processing. There are other forms of processing taking place on the farm in addition to wine making.

Mr. Cope: Why should our people be treated worse than other wine growers in the Common Market?

Mr. Strang: The hon. Gentleman ought to be careful about making statements like that. The English industry, being so small, is not subjected to any of the


constraints on planting which exist in the rest of the Community.

European Community (Cereal Import Levies)

Mr. Jay: asked the Minister of Agriculture, Fisheries and Food what is the present level of EEC levies on imports from outside the EEC of wheat, maize and barley, respectively, as a percentage of the import price.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. E. S. Bishop): Based on the Commission's calculations of import levies of 4th December, the net United Kingdom levy on third country imports of wheat, maize and barley expressed as a percentage of the total import price, including levy, were 31 per cent., 42 per cent. and 49 per cent. respectively.

Mr. Jay: Is my right hon. Friend aware that a major glucose manufacturer in my constituency is being forced by this absurd levy to discharge a large section of his labour force? Will he take strenuous steps to get this levy reduced to a reasonable level, even if it cannot be cut out altogether?

Mr. Bishop: I think that my right hon. Friend will know the views of my right hon. Friend the Minister about that particular levy. The main point is to try to reduce all levies, especially the one concerned.

Mr. Spearing: Does my right hon. Friend agree that those figures show that there is, in effect, a 30 per cent. to 50 per cent. tax on imported grain from outside the EEC including wheat for bread making? Will he let me know, in writing, the amount in millions of pounds per year, thus added to the cost of British bread?

Mr. Bishop: I cannot give the overall figure, but I think that my hon. Friend can work it out if I tell him that the net United Kingdom levy is made up by taking the EEC gross levy, multiplying it by the United Kingdom monetary coefficient, dividing it by the United Kingdom representative rate, and subtracting the United Kingdom MCA. What matters is the effect on the price overall.

Mr. Speaker: Order. The Minister must address the House, not his hon. Friend.

Mr. Peter Mills: Will the Minister bear in mind—I am sure that he knows this but perhaps he has forgotten it—that there are proposals for refunds on imports of maize? This would help the whole of the starch industry. Surely this is the right answer? Will he look at this again and urge his right hon. Friend to pursue this matter of a static refund, because this would help the industry considerably?

Mr. Bishop: I have already said that the matter is still under review. Our view is that the levy should be the minimum possible levy.

European Community (Export Support Policy)

Mr. Giles Shaw: asked the Minister of Agriculture, Fisheries and Food it he has considered whether the export of processed food products from the Community should be given comparable support through the mechanisms of the common agricultural policy and otherwise as is given to the export of primary commodities ; and what is his policy on this matter.

The Minister of Agriculture, Fisheries and Food (Mr. John Silkin): Exports of processed food products are already given comparable support. Restitutions are paid to offset the disadvantage to manufacturers of buying the raw materials above world prices. The Government's policy is to seek reductions in EEC prices in real terms and, subject to this, to continue to treat exports of primary and processed products on a broadly comparable basis.

Mr. Shaw: I thank the right hon. Gentleman for that reply. May I ask him whether he welcomes recent initiatives which the food industry has taken to try to develop new thinking on this issue? Does he not recognise that the effect of fluctuating MCAs must be to depress the long-term marketing strategies of food exporting companies? Does he not also recognise that some degree of stability and greater comparability between the producers of primary and processed products could probably lead to substantial increases in employment in the food industry and fewer accumulations of surpluses?

Mr. Silkin: These are all fair points to make. In return, perhaps the hon. Gentleman will agree that one beneficial result of the work of the past few months


—I believe that the effective date was 25th September—was the across the board reduction of 10 per cent. on the MCAs. I have always thought that it is an absurd way of dealing with things, that the basis of the MCAs—which I believe should not exist on exported processed goods anyway—should be on a notional recipe rather than the actual recipe.

Mr. Hardy: Does my right hon. Friend recognise that some of the food manufacturers have a continuing anxiety about obtaining adequate supplies of beef for manufacturing purposes? Can he say whether he is able to take an optimistic view of future, continued supplies?

Mr. Silkin: I always try to take an optimistic view of the future. I can only say that we shall continue to fight for a greater amount of manufacturing beef to be allowed into the Community. We are used to this and it is useful to our manufacturers. We shall continue to fight for this for as long as we can. Although I cannot claim that progress has been as good as I would like, I can say that we shall not relent in our efforts.

Animals (Exports)

Mr. Ron Thomas: asked the Minister of Agriculture, Fisheries and Food what progress he has made with his EEC partners in reviewing the export of live food animals.

Mr. Corbett: asked the Minister of Agriculture, Fisheries and Food what recent representations he has had on the export of live animals for slaughter.

Mr. John Silkin: We raised this matter at the June meeting of the Council. Since then, the Commission has been working on proposals to implement EEC directive 77/489. I understand that these proposals may be put to the Council before the end of the year.
In the past month I have received a considerable number of letters opposing the export of live food animals, including one from my hon. Friend the Member for Hemel Hempstead (Mr. Corbett) in his capacity as chairman of the Farm Animal Welfare Co-ordinating Executive.

Mr. Thomas: We are all aware of the skilled negotiations which my right hon. Friend carries out, but may I ask

whether he is aware that a large majority of Labour Members would like to see this country stop the export of live food animals immediately, thus setting an example to the other Common Market countries, rather than have this delay while other countries are seemingly dragging their feet?

Mr. Silkin: I sympathise with the point of view expressed by my hon. Friend. The question I put to him, in answer to his supplementary question, is: is it not better that we should deal with this on an all-Europe basis? I do not mean a Common Market-only basis. The committee of experts advising the Council of Europe, which embraces most of the countries in Western Europe, came to this conclusion some time ago. That is what we should be aiming at.

Mr. Corbett: Will my right hon. Friend tell the House when he intends to respond to recent, and earlier, representations which have overwhelmingly reflected the sustained and growing public demand for this vile trade to be ended? Is he aware that it is now nine months since the departmental review was published? Would he not accept the point made by my hon. Friend the Member for Bristol, North-West (Mr. Thomas) that Britain is in a unique position to give a lead to the rest of the Common Market?

Mr. Silkin: I have not always found that leads given by us in the Common Market are necessarily followed by immediate action. Perhaps the best way to deal with this is to decide our policy very clearly—I have already said what my view is—and try to push it as hard as we can inside the Community. I agree that this nine-month period of gestation since the publication of the departmental inquiry seems a long time. My hon. Friend will remember, however, that there was a period for consultation once the document was published. I believe that he had some criticisms of the document.

Mr. Burden: Does not the right hon. Gentleman agree that there is considerable feeling about this matter on both sides of the House? In view of what he has just said, does he not further agree that the time has arrived when the House should have the opportunity to debate the whole issue? Will he, therefore. give an undertaking that he will


arrange for a debate early in the new year?

Mr. Silkin: The hon. Gentleman is well aware that the Minister of Agriculture, Fisheries and Food does not combine with that post the leadership of the House. That is a matter for my right hon. Friend the Leader of the House. I appreciate what the hon. Gentleman is saying. I have no objection to a debate and I shall tell my right hon. Friend of the point made by the hon. Gentleman.

Mr. Litterick: Does not my right hon. Friend agree that it might help to concentrate the minds of our European "partners" if we unilaterally imposed a levy on the export of all live beef and veal animals from this country to the European continent, particularly bearing in mind the crucifying levies mentioned in the reply to Question no. 3 on the Order Paper today, which we have to pay because of the Community?

Mr. Silkin: We are talking about two different types of levy. A levy such as my hon. Friend suggests might be considered to be illegal. There is one point which has some importance. How does it help to prevent cruelty to animals if we stop this trade but it is merely taken over by another of our Community partners?

Mr. Litterick: Make it too expensive and then it will stop.

Mr. Farr: Before the right hon. Gentleman brings any recommendation to the House, will he bear in mind that many thousands of farmers, particularly in the Midlands, are dependent upon the import of live Irish store cattle? Is he aware that any ban on the export of live animals from this country could have a serious effect upon the living of such farmers?

Mr. Silkin: I have thought about this very closely. I see a distinction between animals for slaughter, which in my view should be slaughtered as near to the point of production as possible, and animals for store.

European Unit of Account

Mr. Neubert: asked the Minister of Agriculture, Fisheries and Food what action he is taking to get the European Commission to adopt the European unit

of account for agricultural price purposes and to assess the effect of involvement in the European monetary system on such a policy.

Mr. Strang: The Commission has proposed that, with the introduction of a European monetary system, the European currency unit should be used in the common agricultural policy instead of the existing unit of account. The initial definition of the ECU would be the same as that of the European unit of account.

Mr. Neubert: Does not this move represent a good opportunity to remove some of the distortions and other undesirable features of the common agricultural policy? Are not the Government handicapped in securing those reforms by their inability to be fully involved in the system from the outset?

Mr. Strang: I do not think that I could accept the hon. Gentleman's thesis. The Government are continuing to press for the reform of the common agricultural policy. Above all, that means holding down common prices. We welcome the fact that our policy is now reflected in the Commission's undertaking to propose a general price freeze on all common prices this coming year.

Mr. Spearing: Does my hon. Friend agree that if the hon. Member for Rom-ford (Mr. Neubert) had really wanted an answer to his supplementary question he should have been in the Chamber for the second of the two debates that took place last night after 10 o'clock? Does he agree that if the hon. Gentleman had been so present he would have heard that these matters are so complex that one hon. Member suggested that only about a dozen hon. Members understand the arithmetic? Has my hon. Friend considered that claim and does he agree that it is about right?

Mr. Strang: Iagree with my hon. Friend that perhaps the hon. Member for Romford (Mr. Neubert) should have been present for the debates that took place after 10 o'clock last night. Indeed it was my hon. Friend who in those debates pointed to the complexity of these matters. The comment has some validity. The common agricultural policy is enormously complex and the implications of the changeover to EMS make it even more difficult to comprehend.

Mr. Marten: The Minister has already referred to the holding down of prices, but that is not a reform of the policy. What proposals have the Goverment for reforming the policy rather than the prices?

Mr. Strang: I disagree with the hon. Gentleman's basic observation. The more we consider the CAP the more we are forced to the conclusion that it is not so much the mechanisms that are at fault, unhappy as we are about some of them, but the level of protection. This applies both to the jacking up of prices, especially in Germany, and to the level of protection against third country imports. This is the real weakness.

Marginal Land (Food Production)

Mr. Knox: asked the Minister of Agriculture, Fisheries and Food if he has any plans to expand food production from marginal land.

Mr. Strang: My right hon. Friend the Minister and his agricultural colleagues are still studying the marginal land question.

Mr. Knox: Is the Minister aware that there are no specific aids to the 1½ million acres of marginal land in England and Wales? Does he not think that the European less favoured areas directive should apply to that land?

Mr. Strang: The hon. Gentleman is aware that a significant area of agricultural land receives substantial grants and headage payments, namely the hill areas, under the less favoured areas directive. He is proposing a substantial additional development which would be to designate a large area of marginal land where additional grants and some headage payments might be made. The Government are giving consideration to that and related proposals.

Mr. Geraint Howells: Has the Minister any plans this year to increase the hill compensatory allowance for sheep and beef cattle for those farming in the upland areas?

Mr. Strang: I think that the hon. Gentleman knows that we are actively considering and discussing these matters with the farming unions.

Mr. Madden: Will my hon. Friend acknowledge that to many farmers the

continued production of farm-bottled or green-topped milk is vital, especially in areas such as West Yorkshire and Wales? What plans has he for the continued production of such milk?

Mr. Strang: My hon. Friend has been persistent in his representations on behalf of his producers and consumers. He will be happy to know that my right hon. Friend proposes to make an important announcement later today.

Mr. Jopling: To follow the supplementary question of my hon. Friend the Member for Leek (Mr. Knox), will the Minister give us the facts? Is it true that land in the United Kingdom similar to that which receives grant under the less favoured areas directive in the rest of the Community, does not receive grant? Is that not unfair? May we know the facts?

Mr. Strang: No, that is not so. The United Kingdom does exceptionally well under the less favoured areas directive in terms of the proportion of our land that is designated. We pay high rates of grant compared with other member States.

Mr. Gwynfor Evans: Is the Minister aware that it is from marginal land that the greatest return may be obtained in production for the smallest investment? What is needed in the first place is investment in drainage of the land. Without that preparation it is useless to apply fertilisers and lime, for example, which are leeched away. Will the Minister give attention to that need?

Mr. Strang: Yes, we shall. As the hon. Gentleman knows, we already give valuable advice to farmers in that context and we provide grants in the marginal areas. In carrying out our study we have been considering the matter to which the hon. Gentleman has referred and related matters.

Mrs. Renée Short: Does my hon. Friend recollect the Written Answer that I received from his Department only yesterday about the application of biotechnology to food production? In that answer he stated that he was aware of the application of biotechnology hut was not
 currently funding any research on the subject.
Does my hon. Friend agree that his Department should reconsider that answer


and give consideration to increasing food production from marginal land and other types of land to increase food from our own resources?

Mr. Strang: The main applications of biotechnology do not relate to marginal land. I recall clearly my hon. Friend's Written Question. Biotechnology is an important and developing area that is being sponsored by some large companies.

Food and Drink Industries

Mr. Shersby: asked the Minister of Agriculture, Fisheries and Food what consideration he has given to the effect on the British food and drink industries of the likely accession of Greece, Portugal and Spain to membership of the European Community ; what guidance he has given to the industries ; and if he will make a statement.

Mr. Bishop: My Department is keeping under consideration the implications of enlargement for the food and drink industries. We shall maintain contact with representative organisations as the negotiations with Greece, Portugal and Spain progress.

Mr. Shersby: What assurance can the right hon. Gentleman give that imports of materials required by the United Kingdom food and drink industries from other countries with Mediterranean climates do not have new barriers raised against them when Spain, Portugal and Greece join the Community? I am thinking especially of vegetables and fruit.

Mr. Bishop: The hon. Gentleman will be aware of some of the advantages, such as the increase by about 20 per cent. of the EEC market and availability to our products. As for exports and imports, there will be a review of the levies and tariffs that may affect prices. Depending upon the commodities concerned, we think that on the whole enlargement should be advantageous to us.

Mr. Torney: Has my right hon. Friend and his right hon. Friend the Minister of Agriculture, Fisheries and Food given consideration to surpluses? I imagine that when Greece, Portugal and Spain join the Community we shall as in France, have huge surpluses. Has any consideration been given to the creation of surpluses following enlargement? Will he take

steps to endeavour to ensure that we shall no longer be subsidising the sale of surpluses at give-away prices to third countries while the British taxpayer pays for those sales by taxation and the housewife pays in high prices in the shops? Will he take some action to eradicate surpluses if and when Spain, Greece and Portugal become members of the Community?

Mr. Bishop: As my hon. Friend knows, negotiations are under way in respect of Greece, Spain and Portugal. We are fighting to get rid of surpluses by maintaining reasonable price levels. It is a factor that we shall include in our review of levies and tariffs.

Mr. Giles Shaw: Will the right hon. Gentleman consider his answer to my hon. Friend the Member for Uxbridge (Mr. Shersby) about fruit products grown outside the Community? What justification can there be for the substantial taxes that we are now having to pay upon canned mandarines and pineapples when those products are not grown within the Community? What representations are being made to ensure that there is a review of that taxation?

Mr. Bishop: On imports from non-EEC Mediterranean countries, the existing CCT preferential treatment will continue. There is bound to be some change in favour of the new members. As for United Kingdom imports from the new member States, the United Kingdom imports substantial quantities of fresh and processed fruit, vegetables and wines. Abolition of the levies imposed under the reference price system should lead to improved availability.

Mr. Heffer: Is it not clear that in the process of the negotiations for the entry of Greece, Spain and Portugal into the Common Market the whole issue of the CAP must be discussed and that there should be an understanding that we shall happily accept the three countries into a looser organisation on the condition that there is a complete and fundamental change in the CAP at the earliest possible moment?

Mr. Bishop: My hon. Friend is correct. We are fighting to improve CAP policy for the present nine countries. That is an urgent improvement if we are to


have the accession of Greece in 1981 and Spain and Portugal by 1983.

Bread-making

Mrs. Wise: asked the Minister of Agriculture, Fisheries and Food, what information he has about the relative proportions of wholemeal flour and white flour used in bread-making.

Mr. Bishop: Estimates of the proportions of white and wholemeal flour used in bread-making are 92 per cent. and 2 per cent. respectively. The remaining 6 per cent, is wheatmeal or brown flour which, unlike wholemeal flour, contains less than 100 per cent. of the milled whole wheat.

Mrs. Wise: Does my right hon. Friend accept that these are disappointing figures? He will undoubtedly be aware that there is concern about the nutritional aspects of white flour. Is he aware that there are certain highly dangerous machines that are used in the manufacture of white bread that are not capable of dealing with wholemeal flour? Will he instigate jointly with the Departments of Prices and Consumer Protection, Employment and Health and Social Security investigations into the whole aspect of bread manufacture to cover all aspects for the benefit of both consumers and workers in an important and sweated industry?

Mr. Bishop: I certainly know what my hon. Friend has to say about the two aspects. The dietary advantages of wholemeal bread, and questions relating to the health and nutritional aspects of food composition are kept under review regularly by the Department, in consultation with the Department of Health and Social Security. Flour and bread are at present being investigated by a panel set up by the committee on the medical aspects of food policy.

Mr. Marten: Is the war-time regulation that a percentage of chalk should be included in breadmaking still in existence?

Mr. Bishop: I would not like to reply on that point, but I refer the hon. Gentleman to the second report by the Food Standards Committee on bread and flour which was published not long ago.

River Thames (Flooding)

Mr. Jessel: asked the Minister of Agriculture, Fisheries and Food if he is satisfied with the progress of measures to prevent the River Thames flooding.

Mr. John Silkin: Work on raising the flood defences upstream and downstream of Central London is proceeding satisfactorily but progress on the Thames barrier is disappointingly slow.

Mr. Jessel: When is the completion of the Thames barrier now due? Why is there so much delay on that and, indeed, on the local flood walls as well? As there is great anxiety in parts of Twickenham and Teddington, will the Minister say what can be done to accelerate these works?

Mr. Silkin: This is a very important and vital problem. It is a problem not just for Twickenham—although Twickenham has its special problems—but for London as well. The latest date by which the GLC believes the Thames barrier will be completed is late in 1983. I have been meeting the leader of the GLC with a view to discussing how the scheme might be accelerated. Although the odds in any year against a flood are supposed to be 50 to 1, I am convinced that it could be a very great danger to the citizens of London if it came.

Council of Fisheries Ministers

Mr. Clegg: asked the Minister of Agriculture, Fisheries and Food when next he will attend a meeting of the Council of Fisheries Ministers of the EEC.

Mr. John Silkin: No date has yet been fixed for the next meeting of the EEC Council of Fisheries Ministers, but I expect one to be convened early in the new year.
There is a possibility that a Fisheries Council will be needed before the end of the year to agree interim arrangements for 1979 pending a CFP settlement.

Mr. Clegg: Is the Minister aware that we hope that at the meeting, when it comes, he will be successful in getting a settlement which would be approved by this House? But at the same time will he take up with the Fisheries Ministers the question of compensation for those fishermen already made redundant


through no fault of their own? Will he perhaps argue for compensation on the lines of the amounts given to steelworkers by the EEC under similar schemes?

Mr. Silkin: The question of restructuring the industry is vital, but it clearly must wait upon a settlement of the common fisheries policy, otherwise we simply do not know for what sort of industry we are catering and who may be made redundant. But I take the hon. Gentleman's point. It is a very fair one to make and it will be one of the factors which will need to be discussed and agreed in any settlement.

Mr. James Johnson: In view of the intransigent and blunt opposition of the German Minister, who was the chairman of the last meeting, and in view of his behaviour there, would it not be a good thing to defer the next meeting for as long as possible? Does not my right hon. Friend believe, as most Members of this House believe, that we shall get a squarer deal in the new year with a new chairman?

Mr. Silkin: We shall get a square deal, in my view, when the basic principles that the United Kingdom has continued to enunciate arc recognised and accepted by our Common Market partners. The chairmanship changes anyway on 1st January.

Mr. Henderson: Is the Minister aware that when our boats go to fish in Norwegian waters they are required to report their position when they arrive and when they leave? Will he raise this at the next EEC fisheries meeting and make it clear that we could extend that principle to all foreign boats coming into our waters? Does he agree that he ought to do so in preparation for any new policy or agreement that is reached?

Mr. Silkin: This is a question of management which deserves very careful consideration. I am impressed with the way in which the Norwegians are handling the matter, and it is one which is very near to our thoughts at this moment.

Mr. Warren: I recognise the need for tough attitudes in negotiations in the EEC, but may I ask the Minister to tell us why he is not introducing the essential conservation measures required by inshore fishermen here? There will otherwise be nothing left to negotiate.

Mr. Silkin: I should have thought that the conservation measures we have introduced, and which are already in operation, with one possible exception at this moment—the deferment on the question of nephrops size—were as effective as we need to have them. These are all national measures. None of them is at the moment a community measure.

Mr. Austin Mitchell: When my right hon. Friend next meets his Common Market counterparts, will he indicate to them that he has the support not only of a united fishing industry but of that rarest of all commodities, a united House of Commons, and that there can be no compromise on Britain's basic demands for a 12-mile limit, a dominant preference for British vessels up to the 50 miles, and the continued application of national conservation measures in the waters up to 200 miles?

Mr. Silkin: I try to tell my counterparts that at every Council meeting. Sometimes I wonder whether the interpreters are at fault.

Mr. Peyton: I share the right hon. Gentleman's hope that he will be successful in persuading the other members of the Council of Fisheries Ministers to accept the basic principles of the case he has put forward—principles which have been put forward from all parts of the House—but will he take an early opportunity to shed a little light on the formal proposals which he put last time to the Council? If I may say so, they were somewhat opaque, and even the German Minister—to whom I do not wish to give support at all—could be excused if he rejected them because he could not understand them.

Mr. Silkin: I do not want to go into quarrels about the chairmanship—although, believe me, it is very easy to do so—but what I can say is this. If the German president or any of our members of the Council found these proposals opaque or difficult to comprehend —I fully understand that they might be so—the right thing to do would have been to discuss them and to ask for elucidation of them. Had that been done, as I suggested it should—and, to be fair, one or two members of the Council agreed with me that it should—we might have clarified even the president's mind on that.

Mr. Peyton: Will the right hon. Gentleman take an early opportunity to shed a little light on them, for the benefit of the House of Commons?

Mr. Silkin: I think that it might be of advantage—I will speak to my right hon. Friend the Lord President about it—if before the next meeting of the Council of Fisheries Ministers it were possible for us to discuss these matters ; I agree that they are complicated and that many of them are highly technical. It would not be a bad idea at all.

Potato Marketing Board

Mr. Kimball: asked the Minister of Agriculture, Fisheries and Food when next he will meet the chairman of the Potato Marketing Board.

Mr. Bishop: My right hon Friend met the chairman of the Potato Marketing Board on Tuesday 12th December to discuss matters of mutual interest.

Mr. Kimball: I hope that the chairman of the Potato Marketing Board expressed the thanks of the potato producers for the renewed buying programme which has just been announced. Will the right hon. Gentleman say to what tonnage that is likely to apply? Did his right hon. Friend the Minister of Agriculture also tell the chairman, when he met him, whether he was able to give an estimate of when he thought the market price might reach the guaranteed price of £44·69 a ton?

Mr. Bishop: I can give the hon. Gentleman an assurance as to the chairman being thanked when my right hon. Friend met him. The hon. Gentleman will be aware that prices recently received by the producers were well below the guaranteed price to which he referred. It has justified the buying-in programme. If the position had continued, there would have had to be a very large deficiency payment, which would have had to be met by the taxpayer. The whole process is aimed at stabilising the market.

Mr. Corbett: Can my hon. Friend tell the House about any discussions that he has had on arrangements for the potato market in this country following the introduction of an EEC potato regime? Has he yet made a decision on a response of

some positive help towards the establishment of co-operative grading stations?

Mr. Bishop: It is too early to say what form the support for next year's crop will take or how it will operate from 1979. Of course, we must be clear about the progress of the regime itself. As to the co-operative aspect, I think that my hon. Friend will be aware of my right hon. Friend's reply to my hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) about the encouragement given to the marketing of potatoes by the agricultural marketing co-operatives. I think that that has also been welcomed.

Mr. Geraint Howells: I am sure that the Minister is aware that many producers in this country are worried about the future of the Potato Marketing Board. Does he believe that the producers will have to vote, like the milk producers did last month, to secure the future of the Potato Marketing Board in this country?

Mr. Bishop: The hon. Gentleman will be aware that the negotiations for the future regime have now been under way for some time. In seeking finalisation of the negotiations, we want to bear in mind the need for self-efficiency in potatoes as far as possible, the question of confidence for the producer, and, of course, reasonable prices for the consumer.

National Farmers' Union

Mr. Michael Latham: asked the Minister of Agriculture, Fisheries and Food when he intends next to meet the president of the National Farmers' Union.

Mr. John Silkin: I keep in close touch with the president of the National Farmers' Union, but at present I have no plans for a meeting.

Mr. Latham: Will the Minister be discussing with the president the Labour Party conference policy of agricultural land nationalisation, which the Under-Secretary of State supports? Does the right hon. Gentleman personally support it?

Mr. Silkin: I certainly support the fact that 3 million acres of agricultural land in this country are already publicly owned. If I may say so, they are at least as efficient as those in the hands of absentee landlords.

Mr. Watkinson: When my right hon. Friend next meets the president, will be discuss the future of the dairy industry? Is he aware of attempts to import liquid milk into this country? Is it the case that only health and hygiene regulations are keeping out that milk? Will he take measures to ensure that the dairy industry of Great Britain is protected?

Mr. Silkin: The health and hygiene regulations are of such importance in ensuring that the proper standards of liquid milk in this country are maintained that we shall do everything possible to preserve them. They are one of the factors which at present keep out inferior milk from our country.

Mr. Wells: When the Minister next meets the president, will he take steps to ensure that the chairman of the central horticultural committee of the NFU is also present?

Mr. Silkin: That would be unusual. However, if the hon. Gentleman means "Will I take an interest in horticulture? ". the answer is" Certainly ".

Miss Maynard: Can my right hon. Friend say when he intends to meet the general secretary of the farm workers' union in view of recent happenings? For instance, has he noted that 92 hon. Members have signed a motion supporting the farm workers' claim for average industrial earnings? Is he aware that the farmers on the Agricultural Wages Board are saying that they would have offered more than 5 per cent. had they not been afraid that the Government would apply sanctions? In view of last night's vote, will he reconsider this matter and meet the leaders of the farm workers' union again with a view to giving skilled and important workers, such as farm workers, a return which adequately compensates them for their importance to the country's economy?

Mr. Silkin: I am always glad to meet the general secretary, and as my hon. Friend knows I met him very recently indeed. I should like to clear up one misconception—the task of the Agricultural Wages Board is to fix a minimum rate, not to make a national agreement as such. The difficulty with farm workers—and no one knows this better than my hon. Friend—is that one is dealing with literally thousands of employers

scattered over the countryside, with very small numbers of workers per farm. That in itself makes for difficulties. But I personally think that it would be good if the farmers could enter into self-financing productivity agreements with their individual workers. There is nothing to stop them from doing so, and I shall do anything I can to encourage it.

Mr. Ralph Howell: Will the Minister now give a proper answer to my hon. Friend the Member for Melton (Mr. Latham)? Will he answer "Yes" or "No" whether he personally supports the idea of agricultural land nationalisation?

Mr. Silkin: I did not think that I had tried to dodge the question. On the contrary, I pointed out that 3 million acres of publicly owned agricultural land had been very efficient.

Oral Answers to Questions — WALKER

Q1. Mr. Mike Thomas: asked the Prime Minister if he will pay an official visit to Walker.

The Prime Minister (Mr. James Callaghan): I have at present no plans to visit Walker, in Newcastle-upon-Tyne.

Mr. Thomas: Is my right hon. Friend aware that in Walker there are two Swan Hunter shipyards in which there is currently not a single keel? We are grateful for the order for the third through-deck cruiser, which will go to Wallsend, but the workers in my constituency in Walker are now starting to worry about their future. What will the Prime Minister say to his right hon. Friend the Secretary of State for Industry in the course of his discussions with the Confederation of Shipbuilding and Engineering Unions about the points that it has put forward —scrap and build and others—to present some more work to the shipyards in North-East England, and in particular on the Tyne?

The Prime Minister: I am sure that there are anxieties on the Tyne, but there will probably be even more if the vote of confidence is not carried tonight. As to forward orders, as my hon. Friend says, the new "Ark Royal" has been allocated to Swan Hunter, and I understand that it is tendering for other naval


orders. I believe that British Shipbuilders is fully aware of the need to maintain viability of its operations on the Tyne, but my hon. Friend will be aware, as are his constituents, of the very great difficulty that exists in the world shipbuilding industry at present. British Shipbuilders is doing all that it can to get fresh orders.

Oral Answers to Questions — FIFE

Mr. William Hamilton: asked the Prime Minister if he will pay an official visit to Fife early in 1979.

The Prime Minister: I have at present no plans to visit Fife.

Mr. Hamilton: Failing such a visit, will my right hon. Friend confer with the Secretary of State for Scotland about the inordinate delay in coming to a favourable decision in respect of getting on with the £200 million petrochemical complex at Mossmorran? Is he aware that all three Labour-controlled local authorities and the three local Labour Members of Parliament involved are desperately concerned to get this project going in view of the fact that male unemployment in that area has been chronically above 20 per cent. for a long time?

The Prime Minister: I am aware of the problems at Mossmorran. Indeed, they have concerned us very much, because the economic significance of the proposals is fully appreciated for employment in that area. Unfortunately, very complex safety difficulties have arisen and my right hon. Friend, with whom I have had discussions on this, is most anxious to proceed. But I do not think it is fair to ask him to do so until these safety difficulties have been resolved. I know that he is waiting for further advice on the matter. But I can assure my hon. Friend that the Government want to press on as soon as these difficulties are removed.

Mr. Rifkind: When the Prime Minister is considering a visit to Fife, will he recollect that certain of his predecessors, such as Mr. Asquith, represented Fife constituencies? However, can he recollect a single predecessor who would not have immediately tendered his resignation when his economic policy had been rejected by both party and Parliament?

The Prime Minister: I suggest that we wait and see how the House votes tonight

—[An HON. MEMBER: "Wait and see.] "Wait and see ", is a very good motto in this connection. Let us abide by the verdict of the House of Commons at the end of the day. I am fully ready to.

Oral Answers to Questions — PRIME MINISTER (ENGAGEMENTS)

Mr. Budgen: asked the Prime Minister, if he will list his official engagements for the 14th December.

The Prime Minister: This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be holding further meetings with ministerial colleagues and others.

Mr. Budgen: Will the Prime Minister find time today to confirm that after the two votes last night the Government will abandon the policy of unlawful sanctions against those on the blacklist?

The Prime Minister: I have been asked before about the sanctions being unlawful, but I have never heard it demonstrated that they are unlawful, nor have they been challenged in the courts. I assume that they would have been had they been unlawful. On the question of Government policy on this matter, if the hon. Member will wait a few minutes, I hope to say something more about it this afternoon.

Mr. Skinner: During the course of today or at some other time will my right hon. Friend investigate the Civil Service Department with regard to a letter which I sent to every Government Department asking to be told the number of Tories and Liberals in this House and outside who have quango appointments? Somebody in the Civil Service Department has sent me a letter—I think that it was "Deep Throat "—suggesting that all Government Departments should answer my letter by refusing to give the names of Tories, Liberals and others who have quango jobs. Will the Prime Minister put this matter right?

The Prime Minister: I shall consider whether my hon. Friend is being denied improperly any information to which he is entitled. He is quite right to draw public attention to the fact that, although the Opposition will pretend that only trade union secretaries are members of


these very important bodies which are of great assistance in the public service, there are a large number of Liberals and Conservatives who also place their services at our disposal.

Mr. Andrew MacKay: Does the Prime Minister appreciate that in last night's votes the House clearly showed that it did not approve of the policy of arbitrary sanctions? Will he make it clear to the House this afternoon that he considers this policy to be immoral blackmail, which is quite intolerable?

The Prime Minister: I said last night that the Government would reconsider their policy in view of the verdict of the House. I shall have a little more to say on this later. We may even have more to say about it when we win the next General Election but I doubt whether the hon. Member will be here to listen to it.

Mr. Ashley: In the course of considering the two votes about which the Opposition are making such a great song and dance, will the Prime Minister bear in mind that, despite differences of opinion about pay policy, the whole of the trade union movement has wholeheartedly and categorically said that it will campaign for the return of a Labour Government?

The Prime Minister: Yes, I am in no doubt about that and neither is the country as a whole. My hon. Friend surely understands that the Opposition must get a little cheer now and again. We read from their own supporters that they are rattled about these matters and I am delighted that we were able to give them a little encouragement yesterday. But I promise them it will not go too far.

Mr. Nelson: asked the Prime Minister whether he will list his official engagements for Thursday 14th December.

The Prime Minister: I refer the hon. Member to the reply which I have just given to the hon. Member for Wolverhampton, South-West (Mr. Budgen).

Mr. Nelson: Will the Prime Minister take an opportunity today in his speech on the confidence motion to remind the House that the average household in this country is now paying more than two and a half times as much income tax as it

was when his Government came to office? Does he really think that this is the way to win the confidence of the House or the public? What will he do about it?

The Prime Minister: That seems to be a matter of giving information and not asking for it. There are different interpretations to be put upon these issues. We could, of course, refer to the large increases in incomes that have taken place since the last election. Frankly, it has not been much use when prices have gone up just as fast. That is why I would like a little support from the Opposition now and again in our efforts to overcome inflation.

Mr. Raphael Tuck: Will the Prime Minister take time off to try to drum into the heads of the CBI that one cannot raise prices and at the same time hold down wages, and to drum into the heads of the TUC that one cannot raise wages and at the same time hold prices down? The sooner both parties appreciate the realities of the situation, the better off we all shall be. Is that not what the 5 per cent. guideline is all about?

The Prime Minister: I seem to be in midstream between an inquest on last night's votes and a foretaste of what I propose to say this afternoon. I agree with my hon. Friend that the whole question of the 5 per cent. is not an end in itself. It is a means of ensuring that inflation does not get out of hand and return to the levels of earlier years, even though we do not get much support when we adopt measures to that end.

Mr. Onslow: The Prime Minister said that he has the united support of the trade union movement. Is he really proud to have the support of the National Union of Public Employees?

The Prime Minister: NUPE, like many other unions, is affiliated to the Labour Party and we are happy to have support from all those unions. The policy of that union in relation to a particular dispute—assuming that the hon. Member's snide remark refers to certain difficulties in hospitals—has been condemned by the Secretary of State for Social Services. I hope that hon. Members will not condemn the whole union for the action of some of its members.

Mr. Christopher Price: Is the Prime Minister aware that a policy of sanctions


has many applications? If it were applied to the application of planning agreements and to conformity with the Race Relations Act, for example, it might have greater support on this side of the House in regard to pay policy as well.

The Prime Minister: I am not sure about arguing by analogy on these matters. Each issue must be judged on its merits. I hope that there would be general agreement in the House that those who offend against racial equality and break the law should be visited with the utmost sanction.

Mr. Dykes: asked the Prime Minister if he will list his official engagements for Thursday 14th December.

The Prime Minister: I refer the hon. Member to the reply which I gave earlier today to the hon. Member for Wolverhampton, South-West (Mr. Budgen).

Mr. Dykes: Since the Prime Minister is apparently pessimistic about tonight's result, as it is rumoured that he is packing his luggage at No. 10 today, will he in advance and ex post give the principal reason why he lost the 1979 General Election?

The Prime Minister: The hon. Gentleman has now turned into an astrologer. I hope that his forecasts are incorrect.

An hon. Member: The hon. Gentleman is not a very good clairvoyant.

Mr. Mikardo: What a twittish question.

The Prime Minister: My hon. Friend is quite right, although I hesitate to repeat his elegant language. I also wonder why I bother with such twittish questions.

Mr. Ashton: Will the Prime Minister find time to look at the BBC proposals to switch off late night programmes because of an industrial dispute and put a placard on the screen saying that this is the fault of the Government and their pay policy? Does he realise that this would be as damaging to a Labour Government as switching off television during Christmas 1973 was to the previous Conservative Government? The BBC and the staff have virtually agreed on 7·8 per cent., which merely keeps pace with inflation, and it is ridiculous to promise sanctions against the BBC and insist on bringing in the Advisory, Conciliation and Arbitration Service when there is no dispute. This would only rebound on the Labour Government at a very tricky time.

The Prime Minister: I must say that I am not a connoisseur of late night programmes. I think that all good people should be in bed by 11 o'clock at night. [An HON. MEMBER: "Tell that to Michael."] I cannot understand the ribaldry of the House on this serious matter. I shall not have time to go into the BBC wage claim today, but it must be conducted through the usual channels—the House is also a little slow this afternoon. The Government cannot intervene in these matters of pay policy to exceed the guidelines that they have laid down.

BUSINESS OF THE HOUSE

Mrs. Thatcher: May I ask the Leader of the House to state the business that he is, at present, proposing for the week after the Christmas Recess?

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): The business after the Christmas Adjournment will be, conclusively, as follows:

Monday 15th January—Supply [4th Allotted Day]: motion to take note of the 11th report from the Expenditure Committee, Session 1976–77, the 12th report, Session 1977–78 on the Civil Service, and the related Government observations, Command No. 7117.

Tuesday 16th January—Remaining stages of the House of Commons (Redistribution of Seats) Bill.

Wednesday 17th January—Second Reading of the Industry Bill.

Motion on the Housing Support Grant (Scotland) Order.

Thursday 18th January—Supply [5th Allotted Day]: debate on a subject to be announced.

Friday 19th January—Private Members' Bills.

Mr. Kilfedder: Will the Leader of die House find time after the recess for a debate on the circumstances in which the Governments at Stormont and Westminster approved in 1971 what seems to be a tax avoidance contract of employment for Mr. Hoppe, the former managing director of the Belfast shipyard, under which a salary of £78,000 a year and now compensation of £200,000 has been paid into a Swiss bank account, thus avoiding British taxation?

Mr. Foot: I shall look at what the hon. Gentleman has said, but I cannot promise a debate.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: I propose to give much less time for business questions today because there is a great deal of very important business to be transacted.

Mr. Hugh Jenkins: Can my right hon. Friend say what has happened to the resumption of the Report stage of the Public Lending Right Bill? The Gov-

ernment showed commendable urgency in this matter. I hope that it is not running down.

Mr. Foot: I assure my hon. Friend that the Government's desire to get the Bill on to the statute book is not diminished. I hope to say something about it in my next Business Statement.

Mr. Michael Marshall: If the Government manage to hang on into the new year, we should have an urgent debate on the micro-chip industry in this country. Is the Leader of the House aware that there have been Government announcements about expenditure on research and briefing seminars and that this is a crucial subject, which should be debated urgently?

Mr. Foot: That is one of the many important subjects that we shall be debating throughout the new year.

Mr. Arthur Lewis: Will the Lord President have a word with whoever is responsible to ascertain why, in view of the great success that the Government have had in attacking inflation, hon. Members have to pay £2·96p per pound for the cheese supplied in the self-service Tea Room?

Mr. Foot: I shall look into that matter.

Mr. Speaker: Mr. Robert Adley.

Mr. St. John-Stevas: Mr. St. John-Stevas rose—

Mr. Speaker: Order. I called Mr. Adley, and I propose to call afterwards one more hon. Member from each side before calling the hon. Member for Chelmsford (Mr. St. John-Stevas) from the Opposition Front Bench.

Mr. Adley: Is the Lord President aware that a statement appears to have been made in another place defining Government policy on the question of ballots before strikes, which tells a great deal more than has been told to this House? Will the right hon. Gentleman advise the House whether Lord Wallace's statement, the day before yesterday, that the Government will consider such a move only at the specific request of the TUC is Government policy? If so, will he, at the earliest opportunity, make a statement to the House, or ask one of his right hon. Friends to do so, so that hon. Members may question him?

Mr. Foot: The hon. Gentleman can table a Question if he wishes. The matter has been debated in the House on numerous occasions.

Mr. Whitehead: Is my right hon. Friend aware that there is still some disappointment that we have not had a debate on the report of the Procedure Committee, particularly since we now have not only the report but proposals from the Opposition and the Labour Party about parliamentary reform? May we have an assurance that there will be an early debate?

Mr. Foot: I have already indicated that I think that we should have an early debate, and I am sure that soon after we return the House will want that debate and the Government will be eager to provide it.

Sir Bernard Braine: Bearing in mind the keen interest in all parties to see that justice is done to the small Banaban community in the Pacific, can the Leader of the House say whether a statement will be made about the Gilbert Islands constitutional conference and the safeguards that we hope the Government will provide for the Banabans? Is the right hon. Gentleman aware that we want a statement soon, and certainly very soon after we return?

Mr. Foot: The Government expect to introduce the Gilbert Islands independence Bill as soon as possible after the recess.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. In order to maintain a balance, I shall call one more hon. Member from the Government Benches.

Mr. Wrigglesworth: Will my right hon. Friend be tabling a motion today containing the names of the House of Commons Commission? If not, what is to happen to the administration of this place after 31st December, as the House of Commons (Administration) Act should come into effect from 1st January?

Mr. Foot: I fully appreciate the importance of that matter and the concern of the servants of the House. I hope very much that we shall be able to table a motion today to deal with that question. I cannot make an absolute promise, but I hope that that will be done. If, by any mischance, we are not able to do that,

we shall, of course, take every precaution to safeguard the interests of the staff. The best solution would be for us to put down a motion today, and that is what I want to do.

Mr. St. John-Stevas: Did I hear the Leader of the House aright when he referred to the fourth and fifth allotted Supply Days in his Business Statement? What has happened to the third allotted Supply Day, which vanished so strangely last week? I know that, like myself, the Leader of the House is more literate than numerate, but was his statement a slip of the tongue, a slip of the mind, or sleight of hand? May we have a statement that when we return on 15th January we shall have what is our right. namely, the third allotted Supply Day'.

Mr. Foot: There was no slip of the tongue or sleight of hand on my part. What I said was a deliberate statement of the facts. If the Opposition wish to discuss the matter, I am prepared to meet them, but I must also take into account what you said, Mr. Speaker, from the Chair. You said that the day in question was a Supply Day—and so it was. We dealt with the matter in exactly the normal fashion, but if the Opposition wish to discuss the matter further, I am prepared to do so.

Mr. St. John-Stevas: On a point of order, Mr. Speaker. I regret that I cannot accept that contribution from the Leader of the House. I must ask for your ruling on this important matter. which concerns the rights of the Opposition. I refer you particularly to Standing Order No. 17(2)(b) and (5)(f), among others.
May I ask, Mr. Speaker, for your ruling on whether we are entitled to a third Supply Day when we return after the recess?

Mr. Foot: Further to that point of order, Mr. Speaker. I told the hon. Member for Chelmsford (Mr. St. John-Stevas) when he first raised the matter that I was prepared to discuss it with him. I hope that before you make a judgment on the matter, Mr. Speaker, you will also be prepared to listen to our submissions.

Mr. Speaker: Obviously, I cannot give a ruling on this matter today. I shall be in touch with both sides of the House. I


shall give a ruling when we return after the recess.

BILL PRESENTED

COUNTRYSIDE

Mr. Secretary Shore, supported by Mr. Secretary Rees, Mr. Secretary Morris, Mr. John Silkin, Mr. Denis Howell and Mr Gavin Strang presented a Bill to amend the law relating to the conversion into agricultural land of moor and heath in National Parks, to provide for the diversion of footpaths and bridleways crossing land on which bulls are kept and otherwise to amend the law relating to National Parks and the countryside: And the same was read the First time ; and ordered to be read a Second time tomorrow and to be printed [Bill 47].

BUSINESS OF THE HOUSE

Motion made, and Question proposed,

That, at this day's sitting, notwithstanding the provisions of Standing Order No. 3 (Ex - empted Business), the Motions relating to the Rate Support Grant Order 1978, the Rate Support Grant (Increase) Order 1978, the Rate Support Grant (Increase) (No. 2) Order 1978 and the Rate Support Grant (Scotland) Order 1978, may be proceeded with, though opposed, after Ten o'clock but that Mr. Speaker shall put any questions necessary to dispose of proceedings on those Motions not later than four hours after the Motion relating to the Rate Support Grant Order 1978 has been entered upon.—[Mr. Foot.]

Mr. Emery: Mr. Speaker, I have given you notice—I am sorry that it was not as long as I should have liked—that I wish to move three amendments to the motion —amendments which I have submitted to the Table—because I am particularly concerned to find that the rate support grant debate is now to be organised by the Government, after the confidence motion today, and that in the business motion there is a built-in guillotine to limit the debate to four hours and to ensure that the Scottish rate support grant is mixed up with the English debate, which is entirely contrary to the normal practice.
Therefore, I have submitted three manuscript amendments which would allow the two debates to be separated and which at the same time would ensure that there is four hours of debate for the English orders and then two hours for the

Scottish order. It does not seem that this is unfair. We are not attempting to override what the Government have proposed, although I had personally hoped that we would find time to have a full day for the debate, as we ought to have for the whole rate support grant consideration.
There are many submissions to hon. Members from the Association of County Councils and from the Association of District Councils. There are already motions and amendments on the Order Paper dealing with this matter, showing how much it concerns individual authorities and individual counties.
I hope very much, Mr. Speaker, that if you will allow the amendments to be called the Opposition will wish to support them—[An. HON. MEMBER: "You are the Opposition."]—only for a little while—and that the opposition to the Government on the Labour Benches will want to support the amendments, because the orders deal with £7·5 billion of expenditure—

Mr. Rooker: Where was the hon. Gentleman last Thursday?

Mr. Emery: —which is something that they suggest needs to have the most extensive consideration.
Therefore, I submit, Mr. Speaker, that the amendments should be put to the House. They would help the House in dealing with the business later and would, I believe, meet many of the wishes of hon. Members.

Mr. Freud: Further to that point of order, Mr. Speaker. As no hon. Members are likely to change their minds in the course of the debate which is to take place over the next six hours, would it not be possible to have the vote on that subject now? Also, in view of the Prime Minister's contention that all good people should be in bed by 11 o'clock, that would then give us a full day's debate on the rate support grant.

Mr. Speaker: The House is obliged to the hon. Member for Isle of Ely (Mr. Freud).
I am prepared to accept the manuscript amendment, but I hope that, in its own interests, the House will come to an early decision one way or another, if the hon. Member for Honiton (Mr. Emery) will move the amendment formally.

Mr. Emery: I beg to move, as an amendment to the Question, after
 Rate Support Grant (Increase) Order 1978 ".
insert
 and ".
I think that that clarifies the situation. If the House accepts the amendment, that will be the end of the matter.

Mr. Speaker: And even if the House does not accept it, that will be the end of the matter.
I shall read the manuscript amendments to the House before I put the Question. They are as follows:

After
 Rate Support Grant (Increase) Order 1978 ",

Division No. 27]
AYES
3.44 p.m.


Adley, Robert
Grimond, Rt Hon J.
Mills, Peter


Aitken, Jonathan
Grist, Ian
Moate, Roger


Amery, Rt Hon Julian
Hall-Davis, A. G. F.
Molyneaux, James


Atkinson, David (B mouth, East)
Hamilton, Archibald (Epsom &amp; Ewell)
Monro, Hector


Awdry, Daniel
Hamilton, Michael (Salisbury)
Montgomery, Fergus


Baker, Kenneth
Hampson, Dr Keith
Moore, John (Croydon C)


Banks, Robert
Hannam, John
Morgan, Geraint


Beith, A. J.
Harrison, Col Sir Harwood (Eye)
Morgan-Giles Rear-Admiral


Bell, Ronald
Harvie Anderson, Rt Hon Miss
Morris, Michael (Northampton S)


Bennett, Sir Frederic (Torbay)
Havers, Rt Hon Sir Michael
Morrison, Hon Charles (Devizes)


Benyon, W.
Hayhoe, Barney
Mudd, David


Berry, Hon Anthony
Hicks, Robert
Neave, Airey


Biffen, John
Higgins, Terence L.
Nelson, Anthony


Blaker, Peter
Holland, Philip
Neubert, Michael


Boscawen, Hon Robert
Hooley, Frank
Newton, Tony


Bottomley, Peter
Hooson, Emlyn
Onslow, Cranley


Boyson, Dr Rhodes (Brent)
Howe, Rt Hon Sir Geoffrey
Oppenheim, Mrs Sally


Bradford, Rev Robert
Howell, David (Guildford)
Page, Rt Hon R. Graham (Crosby)


Braine, Sir Bernard
Howell, Ralph (North Norfolk)
Paisley, Rev Ian


Brittan, Leon
Howells, Geraint (Cardigan)
Parkinson, Cecil


Brooke, Hon Peter
Hurd, Douglas
Pattie, Geoffrey


Brotherton, Michael
Irving, Charles (Cheltenham)
Penhaligon, David


Bryan, Sir Paul
James, David
Peyton, Rt Hon John


Buchanan-Smith, Alick
Jessel, Toby
Powell, Rt Hon J. Enoch


Buck, Antony
Johnston, Russell (Inverness)
Prentice, Rt Hon Reg


Budgen, Nick
Jopling, Michael
Price, David (Eastleigh)


Burden, F. A.
Joseph, Rt Hon Sir Keith
Pym, Rt Hon Francis


Butler, Adam (Bosworth)
Kaberry, Sir Donald
Raison, Timothy


Carlisle, Mark
Kershaw, Anthony
Rees-Davies, W. R.


Clarke, Kenneth (Rushcliffe)
Kilfedder, James
Renton, Rt Hon Sir D. (Hunts)


Clegg, Walter
Kimball, Marcus
Rhodes James, R.


Cope, John
King, Tom (Bridgwater)
Ridley, Hon Nicholas


Cormack, Patrick
Kitson, Sir Timothy
Rifkind, Malcolm


Costain, A. P
Knox, David
Roberts, Michael (Cardiff NW)


Craig, Rt Hon W. (Belfast E)
Lamont, Norman
Roberts, Wyn (Conway)


Dean, Paul (N Somerset)
Latham, Michael (Melton)
Rodgers, Sir John (Sevenoaks)


Drayson, Burnaby
Le Marchant, Spencer
Ross, Stephen (Isle of Wight)


Durant, Tony
Lewis, Kenneth (Rutland)
Sainsbury, Tim


Dykes, Hugh
Luce, Richard
St. John-Stevas, Norman


Eden, Rt Hon Sir John
McCrindle, Robert
Shaw, Giles (Pudcey)


Edwards, Nicholas (Pembroke)
McCusker, H.
Shepherd, Colin


Eyre, Reginald
Macfarlane, Nell
Shersby, Michael


Fairbairn, Nicholas
MacGregor, John
Silvester, Fred


Fairgrieve, Russell
MacKay, Andrew (Stechford)
Sims, Roger


Fell, Anthony
Macmillan, Rt Hon M. (Farnham)
Sinclair, Sir George


Fisher, Sir Nigel
McNair-Wilson, M. (Newbury)
Skeet, T. H. H.


Fletcher, Alex (Edinburgh N)
McNair-Wilson, P. (New Forest)
Smith, Dudley (Warwick)


Forman, Nigel
Madel, David
Smith, Timothy John (Ashfield)


Freud, Clement
Marshall, Michael (Arundel)
Stainton, Keith


Fry, Peter
Marten, Neil
Stanbrook, Ivor


Gilmour, Rt Hon Sir Ian (Chesham)
Mates, Michael
Stanley, John


Glyn, Dr Alan
Mather, Carol
Steel, Rt Hon David


Goodhart, Philip
Mawby, Ray
Stradling, Thomas J.


Goodlad, Alastair
Maxwell-Hyslop, Robin
Tapsell, Peter


Grant, Anthony (Harrow C)
Mayhew, Patrick
Tebbit, Norman


Grieve, Percy
Meyer, Sir Anthony
Thatcher, Rt Hon Margaret

insert
 and ".

The other two amendments are consequential, and are as follows:

To leave out
 and the Rate Support Grant (Scotland) Order 1978

At the end to add:
 and the Motion relating to the Rate Support Grant (Scotland) Order 1978 may be then proceeded with although opposed, and Mr. Speaker shall put the Question necessary to dispose of that Motion not later than two hours after it has been entered upon ".

Question put, That the amendment be made:—

The House divided: Ayes 177, Noes 217.

Trotter, Neville
Wells, John



Wainwright, Richard (Colne V)
Whitelaw, Rt Hon William
TELLERS FOR THE AYES:


Wakeham, John
Whitney, Raymond
Mr. Alan Clark and


Wall, Patrick
Younger, Hon George
Mr. Peter Emery.


Warren, Kenneth






NOES


Abse, Leo
Garrett, John (Norwich S)
Perry, Ernest


Allaun, Frank
George, Bruce
Phipps, Dr Colin


Armstrong, Ernest
Ginsburg, David
Price, C. (Lewisham W)


Ashley, Jack
Gourlay, Harry
Price, William (Rugby)


Ashton, Joe
Graham, Ted
Radice, Giles


Atkins, Ronald (Preston N)
Grant, George (Morpeth)
Rees, Rt Hon Merlyn (Leeds S)


Bagier, Gordon A. T.
Grocott, Bruce
Reid, George


Bain, Mrs Margaret
Hamilton, W. W. (Central Fife)
Roberts, Albert (Normanton)


Barnett, Guy (Greenwich)
Hardy, Peter
Roberts, Gwlym (Cannock)


Barnett, Rt Hon Joel (Heywood)
Harrison, Rt Hon Walter
Robertson, George (Hamilton)


Bates, Alf
Hattersley, Rt Hon Roy
Robinson, Geoffrey


Benn, Rt Hon Anthony Wedgwood
Hayman, Mrs Helene
Rodgers, George (Chorley)


Bennett, Andrew (Stockport N)
Healey, Rt Hon Denis
Rodgers, Rt Hon William (Stockton)


Bidwell, Sydney
Heffer, Eric S.
Rooker, J. W.


Blenkinsop, Arthur
Henderson, Douglas
Roper, John


Boardman, H.
Home Robertson, John
Ross, Rt Hon W. (Kilmarnock)


Boothroyd, Miss Betty
Howell, Rt Hon Denis (B'ham, Sm H)
Sandelson, Neville


Bottomley, Rt Hon Arthur
Huckfield, Les
Selby, Harry


Boyden, James (Bish Auck)
Hughes, Roy (Newport)
Shaw, Arnold (llford South)


Bradley, Tom
Hunter, Adam
Sheldon, Rt Hon Robert


Bray, Dr Jeremy
Irving, Rt Hon S. (Dartford)
Shore, Rt Hon Peter


Brown, Robert C. (Newcastle W)
Jackson, Miss Margaret (Lincoln)
Short, Mrs Renee (Wolv NE)


Buchan, Norman
Janner, Greville
Silkin, Rt Hon S. C. (Dulwich)


Buchanan, Richard
Jay, Rt Hon Douglas
Silverman. Julius


Butler, Mrs Joyce (Wood Green)
Jeger, Mrs Lena
Skinner, Dennis


Callaghan, Rt Hon J. (Cardiff SE)
Jenkins, Hugh (Putney)
Snape, Peter


Callaghan, Jim (Middleton &amp; P)
Johnson, James (Hull West)
Spearing, Nigel


Campbell, Ian
Johnston, Walter (Derby S)
Spriggs, Leslie


Canavan, Dennis
Jones, Alec (Rhondda)
Stallard, A. W.


Cant, R. B.
Jones, Barry (East Flint)
Stewart, Rt Hon Donald


Carmichael, Neil
Kaufman, Rt Hon Gerald
Stewart, Rt Hon M. (Fulham)


Cartwright, John
Kelley, Richard
Stoddart, David


Castle, Rt Hon Barbara
Kerr, Russell
Stott, Roger


Cocks, Rt Hon Michael (Bristol S)
Lamond, James
Strang, Gavin


Cohen, Stanley
Latham, Arthur (Paddington)
Strauss, Rt Hon G. R.


Coleman, Donald
Lestor, Miss Joan (Eton &amp; Slough)
Summerskill, Hon Dr .Shirley


Colquhoun, Ms Maureen
Lewis, Arthur (Newham N)
Taylor, Mrs Ann (Bolton W)


Conlan, Bernard
Lewis, Ron (Carlisle)
Thomas, Mike (Newcastle E)


Cook, Robin F. (Edin C)
Litterick. Tom
Thomas, Ron (Bristol NW)


Corbett, Robin
Lofthouse, Geoffrey
Thompson, George


Cowans, Harry
Loyden, Eddie
Thome, Stan (Preston South)


Cox, Thomas (Tooting)
Lyons, Edward (Bradford W)
Tierney, Sydney


Craigen, Jim (Maryhill)
McElhone, Frank
Tilley, John


Crawshaw, Richard
MacFarquhar, Roderick
Tinn, James


Crowther, Stan (Rotherham)
McKay, Alan (Penistone)
Tomlinson, John


Cryer, Bob
Maclennan, Robert
Tomney, Frank


Cunningham, G. (Islington S)
McMillan, Tom (Glasgow C)
Torney, Tom


Cunningham, Dr J (Whiteh)
McNamara, Kevin
Tuck, Raphael


Davies, Bryan (Enfield N)
Mahon, Simon
Urwin, T. W.


Davis, Clinton (Hackney C)
Mallalieu, J. P. W.
Varley, Rt Hon Eric G.


Deakins, Eric
Marks, Kenneth
Walker, Terry (Kingswood)


Dean, Joseph (Leeds West)
Marshall, Dr Edmund (Goole)
Watkins, David


Dempsey, James
Marshall, Jim (Leicester S)
Watkinson, John


Dewar, Donald
Mason, Rt Hon Roy
Watt, Hamish


Doig, Peter
Maynard, Miss Joan
Weetch, Ken


Dormand, J. D.
Mikardo, Ian
Wellbeloved, James


Douglas-Mann, Bruce
Millan, Rt Hon Bruce
White, James (Pollok)


Duffy, A. E. P.
Mitchell, Austin (Grimsby)
Whitehead, Phillip


Edge, Geoff
Morris, Rt Hon Charles R.
Whitlock, William


Ellis, John (Brigg &amp; Scun)
Morris, Rt Hon J. (Abersvon)
Willey, Rt Kon Frederick


English, Michael
Morton, George
Williams, Alan Lee (Hornch'ch)


Evans, Fred (Caerphilly)
Mulley, Rt Hon Frederick
Williams, Rt Hon Shirley (Hertford)


Evans Gwynfor (Carmarthen)
Murray, Rt Hon Ronald King
Wison, Gordon (Dundee E)


Evans, loan (Aberdare)
Newens, Stanley
Wilson, Rt Hon Sir Harold (Huyton)


Ewing, Harry (Stirling)
Oakes, Gordon
Wise, Mrs Audrey


Faulds, Andrew
Ogden, Eric
Woodall, Alec


Fernyhough, Rt Hon E.
Orbach, Maurice
Woof, Robert


Flannery, Martin
Orme, Rt Hon Stanley
Wrigglesworth, Ian


Foot, Rt Hon Michael
Owen, Rt Hon Dr David
Young, David (Bolton E)


Ford, Ben
Palmer, Arthur



Forrester, John
Park, George
TELLERS FOR THE NOES:


Fowler, Gerald (The Wrekin)
Parry, Robert
Mr. John Evans and


Fraser, John (Lambeth, N'w'd)
Pavitt, Laurie
Mr. James Hamilton.


Freeson, Rt Hon Reginald




Question accordingly negatived.

Mr. Speaker: The Question is, the Prime Minister's business motion—

Mr. Newens: On a point of order, Mr. Speaker—

Mr. Speaker: Order. I will put the motion first. The hon. Member's point of order is on the next business, I think.

Mr. Newens: No, Mr. Speaker, it is not. My point of order is this. Before you put the Question on this motion, since many Government supporters sympathise with the view advanced by the hon. Member for Honiton (Mr. Emery) about the need for a longer period of time than is being allocated to the various rate support grant orders, may I ask whether there are any circumstances in which we could, without stopping the process of local government being carried on, have this debate or part of it when the House reassembles after Christmas?

Mr. Speaker: That is not really a matter for me.

Question put and agreed to.

Ordered,

That, at this day's sitting, notwithstanding the provisions of Standing Order No. 3 (Exempted Business), the Motions relating to the Rate Support Grant Order 1978, the Rate Support Grant (Increase) Order 1978, the Rate Support Grant (Increase) (No. 2) Order 1978 and the Rate Support Grant (Scotland) Order 1978, may be proceeded with, though opposed, after Ten o'clock but that Mr. Speaker shall put any questions necessary to dispose of proceedings on those Motions not later than four hours after the Motion relating to the Rate Support Grant Order 1978 has been entered upon.

GOVERNMENT POLICY

3.59 p.m.

The Prime Minister (Mr. James Callaghan): I beg to move,

That this House expresses its confidence in Her Majesty's Government and in its determination to strengthen the national economy, control inflation, reduce unemployment and secure social justice.

During Question Time I was asked about discretionary action, and perhaps I might begin by making some more references to it now, since I know the House will wish me to.

Last night, I said at once that the Government would of course review their policy in the light of the votes that had been taken, and we had a preliminary discussion about it this morning. We interpret those votes as meaning that the Government should no longer use discretionary powers in the private sector as a measure to counter inflation where settlements breach the Government's pay policy. In accordance with the resolution passed by the House the Government will therefore no longer use such powers for that purpose. Firms which have been told that discretionary action will be taken against them due to a breach of the pay guidelines will be informed that such action will no longer be taken on that ground. The Government will give further details about other matters in due course. I hope that that will be satisfactory to the House as an immediate response to the motions that were passed last night.

I accept that last night's vote reflected a genuine anxiety about the sanctions element of the Government's policy by the Opposition and some of my hon. Friends, but I am bound to add my own view that by this decision—which we accept—the House is tying one hand behind our backs in the fight against inflation.

The genuine anxiety that was felt in the House, which I readily concede, was shared by the Cabinet. We came to a somewhat reluctant conclusion about the use of these powers. We decided that sanctions should be an element in our policy because we believe—this is the difference between us—that the Government have to use all the legal powers at their disposal to ensure that the private sector plays its part in the battle against inflation.

The House has decided that it does not want us to proceed in this way. So be it. But it must make it clear to the private sector and to the small majority which supported the vote last night that there is one formidable sanction that remains. It is not a Government sanction; it is that if the private sector is not willing to stand firm in the battle against inflation and to control it—if it constantly takes, as it has in the past, the soft option of buying industrial peace and passing on the consequences to the customers in high prices—private industry will face, with the rest of the country, the consequences of once again tumbling towards hyper-inflation.

Members of the Opposition might not like that conclusion but it is irresistible from the premise from which we start. I say that to everybody, as I have done consistently and continually. I wish that Members of the Opposition would address themselves in this way. That sanction should make everybody think twice before they talk about the future and before they talk in terms of victory and defeat in this matter.

In my view the only victory that counts is the victory in the fight against inflation and unemployment. That is where the real victory and the real defeat will lie—not in the exchanges in the House. The only defeat that would matter—I say this advisedly—would be the national defeat of failing to maintain the country on the path that we have begun to tread and thereby to throw away the progress that we have made in the last few months.

Perhaps the Government would go down in such a defeat, but it would not be a defeat for the Government alone. Let there be no doubt about that. What is more, thanks to the events of the last four or five years everybody in the country understands this. Perhaps that was the reason for some of the reticence and restrained enthusiasm by the Opposition when they won the vote last night.

The Government are not willing to give up the fight now. The progress that we have made already is too substantial to be thrown away. What is more, I believe that the country at large would condemn us if we were to give up the fight. There is a climate of opinion in the country that everybody should acknowledge. The

Opposition ignore it at their peril. It requires us all to try for a consensus that will keep inflation at bay. That applies to both sides of industry and to the Government.

We must try again. The measures that we chose are not acceptable to the House. We are democrats, and we accept that. We must now make another effort. The alternatives are not for us, as a House, to consider in these circumstances.

The CBI has asked to see me. I am ready to meet its members and to hear their proposals for dealing with the situation. A meeting has been arranged for next Tuesday between the TUC economic committee, which comprises a number of important trade unions, and my right hon. Friend the Chancellor of the Exchequer. The Government will listen to what is said and seek to respond. We shall be approaching and responding to the CBI and the TUC in a constructive mood. The general policy of the CBI and the TUC is the desire to keep inflation down at the present level and, indeed, to reduce it even further. I have no doubt that they will respond to us in the same spirit.

Both the TUC and the CBI are opposed to inflation increasing, as are the Government. Very well. How are we to ensure that it does not? I have asked that question repeatedly. If our measures are repudiated, we must know what other alternatives exist.

Our prospects for 1979 follow the policies that we have carried through so far. I know that hon. Gentlemen might not accept them all. But it cannot be denied that our policies have steadily reduced unemployment in the last 12 months. They have lowered the inflation rate. Exports have improved. Sterling has held steady for nearly two years. There is improved growth in the economy, at a faster rate than for some time. As a result of our policies, we have not only increased pensions and other benefits; we have reduced taxes. We have not reduced them as much as the Opposition would like, but they have come down, and that has made a substantial difference. [HON. MEMBERS: "Not enough."]

It might not be enough. Pensions are not high enough, but we have to make a choice. Benefits are not high enough. The money allocated to the Health


Service is not enough. All these things are necessary. I do not believe in taking money out of people's pockets for the sake of Government spending. Of course I do not.

The Government's policy is that we must keep a balance between public expenditure and private expenditure. The complaints that come day by day and week by week about the state of the public services show that that is necessary. We must try to keep the country on a path on which there is steady economic growth. From that we shall achieve dividends in the way of additional revenue to be used as we, the House of Commons, think best.

Our purpose is to continue with those policies during 1979. We believe that it is the best combination of policies to encourage greater productivity, on which our future prosperity depends. In that connection, I am bound to tell the House that we have heard nothing so far that makes us depart from our judgment—and not only ours—that an overall level of 5 per cent. increase in earnings throughout the country is the best way to achieve those objectives.

Mr. Nicholas Ridley: Mr. Nicholas Ridley (Cirencester and Tewkesbury) rose—

The Prime Minister: The Government's judgment on the 5 per cent. is backed by the right hon. Members for Lowestoft (Mr. Prior) and Sidcup (Mr. Heath). We are not alone in our belief.
A steady reduction in inflation levels is the foundation for the success of all our policies, especially for our continuing success in reducing the number of men and women who are out of work and reducing inflation.
I have explained the type of policy that we intend to continue to pursue so long as we command a majority in the House. But against the background of of the debate I am entitled to ask the Opposition what they would do in 1979 to prevent inflation from increasing. What would they do to prevent unemployment from increasing? Whatever policies we have proposed—

Mr. Ridley: Mr. Ridley rose—

The Prime Minister: The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) was dismissed from the Front

Bench. I am addressing myself to the Front Bench.

Sir John Eden: Cheap.

The Prime Minister: I will not give way to the hon. Member for Cirencester and Tewkesbury. I am ready to give way, but not to him.
Whatever policies we have proposed the Opposition have almost automatically opposed. They are against the pay policy, are they not? They are against the policy for prices, are they not? The hon. Member for Gloucester (Mrs. Oppenheim) is opposed to any policy for keeping prices down—

Mrs. Sally Oppenheim: indicated dissent.

The Prime Minister: Those who sat through the long debates last year will know that that is true. The Opposition are against sanctions on private firms, are they not? They are against giving financial aid to sustain industry suffering from the world recession, are they not? Textiles, shipbuilding, steel, motor cars, footwear, Meriden, KME—you name it, they are against it. Never since the 1930s has the Tory Party displayed such a Gradgrind image as it does today. This is the first time since the end of the last war that the Tory Party has so completely and slavishly succumbed to the doctrine of the free market.
The right hon. Member for Worcester (Mr. Walker) has told us where that leads. The doctrine of the free market, so espoused by his right hon. and hon. Friends above the Gangway, leads, he tells us, to social disorder, envy, division and conflict. I suggest that the right hon. Gentleman conducts his debate with his right hon. Friends on the Front Bench. The words that I have used were his, not mine. I suggest to the right hon. Member for Leeds, North-East (Sir K. Joseph) that he should get this disorder out of his blood before he can be regarded as fit for office.
The Opposition have scorned our policies and rejected them. How would they keep down inflation in 1979? I am not talking about generalisations for the mid-1980s, but about next year—

Mr. Ridley: Mr. Ridley rose—

The Prime Minister: The main guide that we have is what the right hon. Lady the Leader of the Opposition said in the debate on the Loyal Address on 1st November last. She said that the supply of money is the only thing that will hold inflation.

Mr. Ridley: Hear, hear.

The Prime Minister: The right hon. Lady has at least one supporter, I notice. But the sweet simplicity of her statement hides a multitude of bankruptcies and tens of thousands of men and women out of work. Is that really the remedy for 1979?

Mr. Michael Heseltine: Since the statistics for bankruptcies in industry were first kept about 80 years ago, the highest level was under the right hon. Gentleman's Government in 1976.

The Prime Minister: If that is so, as an index of the world recession, how many more bankruptcies does the hon. Gentleman think will arise—

Mr. Robert Adley (Christchurch and Lymington): What about the effect of the earthquake in Nicaragua?

The Prime Minister: How many more will arise under a policy that states that the supply of money will be the only thing that will control inflation?

Mr. Heseltine: I would very much hope to go back to the level of bankruptcies under the last Tory Government, which was a lot lower than the level under the right hon. Gentleman's Government.

The Prime Minister: I note that reply. That also would mean, presumably, going back to an increase in the money supply of 25–30 per cent. I think that the right hon. Member for Leeds, North-East has to do some more conversion before he can get the hon. Member for Henley (Mr. Heseltine) on to his side on this matter.
But if that is the policy of the Opposition—that the supply of money is the only thing that will hold inflation, and therefore if we assume that they will not return to the levels of money that fuelled inflation last time to 25–30 per cent.—what becomes of the statement by the right hon. Member for Lowestoft that 5 per cent. is a good guideline for wage

settlements next year? The Government's attitude is clear. What is the Opposition's attitude to that? Is their former view thrown into the trash can? Is the Leader of the Opposition saying that if inflation starts to rise again her remedy will be to tighten the supply of money, as the only thing that will hold inflation? Will she then sit back and wait for the spate of bankruptcies? Is that the policy that the Opposition choose to follow?
We all know from the right hon. Lady's speech at Penistone that she believes that wage increases in the public sector must be limited. The Opposition are hoping, perhaps with a misplaced sense of optimism, to become the Government—[HON. MEMBERS: "We will."] Very well, then they will face not the joys of opposition but the responsibilities of government.
I ask them a very clear question. What do they think should be the appropriate level for increases in pay in the public sector in 1979? I think that the Leader of the Opposition might give us an indication of her views on that. Let us have a considered reply. Is it to be the 5 per cent. put forward by the right hon. Member for Lowestoft? Is it to be more, or is it to be less? I see the right hon. Member has just come in. If I were he, I would leave again. I do not want to embarrass him too much.
These are proper questions for an Opposition to be asked to answer in present circumstances. The House and the country will not be greatly impressed if the right hon. Lady rides off with general platitudes about cutting taxes or having a referendum on hanging, or whatever is the current vote-catching platitude for the day.

Mr. James Prior: Is the Prime Minister aware that I did not put forward the figure of 5 per cent.? He put that figure forward but, unlike him, when we were in a similar position to his in 1973–74, I and my party have not sought to undermine the policy—[Interruption.]

Mr. Speaker: Order. The Prime Minister gave way to the right hon. Gentleman. The right hon. Gentleman must be heard.

Mr. Prior: We have not trotted round the South Wales miners undermining the policy.

The Prime Minister: I do not wish to make anything more difficult than I can for the right hon. Member for Lowestoft. I understand and I am grateful for the support that he gave us when he said that he thought that 5 per cent. was the appropriate figure for 1979. I am anxious that he should not resile from that position. I want him to keep the Leader of the Opposition up to it, and I hope that he will continue to do so.
The right hon. Gentleman says that he has not gone around undermining our position. I think that he is one of the members of the Opposition Front Bench who have tried not to. What about the rest of them? What were they saying when we brought forward proposals for the Armed Forces? What were they saying when we came forward with a reasonable proposal for the police? Was that not undermining our position? I exonerate the right hon. Gentleman, but not the rest of the Conservative Party. He stands like the boy on the burning deck, full of honour, but I fear that he will be left alone.
Perhaps, however, the right hon. Gentleman is not entirely alone. We know that the Opposition do not have a policy about public sector pay and that all they want in the private sector is a free-for-all. We have heard the verdict on it—the verdict given on the present Leader of the Opposition's position by the former Leader of the Opposition, the right hon. Member for Bexleyheath—[HON. MEMBERS: "Sidcup."]— Bexleyheath, Sidcup (Mr. Heath)—[HON. MEMBERS: "No, Sidcup."] The constituency might be wrong, but hon. Members should wait for what he said. I know that there is a tremble of apprehension through the Conservative Back Benches. The right hon. Gentleman was very brief, as he often is. He was very clear and very terse. On 12th October, talking about the Conservative policy on the key issue of inflation, he said:
 It will just not work.
It will just not work. If that is the verdict of the former Leader of the Opposition and the former Prime Minister on the present Leader of the Opposition, what will she do to make it work? What practical proposals has she to put forward to make sure that it will work? We have some. Unfortunately, we have

lost a part of the instrument that we had, but we intend to pursue the policy, as we have done up to the moment. If the Leader of the Opposition cannot convince her predecessor that her policy will work, how does she hope to convince the country that it will work?

Mr. Peter Bottomley: The Prime Minister referred to his difficulty last night over part of his policy. Does he believe that his policy, his party's policy, can work when it has been rejected both by the TUC, who are supposed to be the main supporters of his party and Government, and by his own party conference?

The Prime Minister: As I said before, it makes it a lot more difficult, but the Government have the responsibility for carrying this through. We intend to do so as long as we can command a majority in this House. We intend to go on doing so. We are ready—indeed, the arrangements have been made—to discuss with both sides of industry what they can propose that will make this policy work. Let us hear from them. They will not find that I am rigid or unbending towards anything that will ensure that inflation does not rise again into double figures and, indeed, that will reduce it below its present level.
That is the task. I am willing to accept advice from anyone provided that it is practical and can be carried out I am invited—

Mr. Norman Tebbit: Mr. Norman Tebbit (Chingford) rose—

The Prime Minister: No. I am very selective about those to whom I give way. Mr. Speaker, I was—

Mr. Ralph Howell: Mr. Ralph Howell (Norfolk, North) rose—

The Prime Minister: Yes, I will give way to that hon. Member.

Mr. Howell: Is the Prime Minister aware that he has been so successful in holding down wages that we now have the lowest wage rates in the EEC? Is he aware that his policy or any similar policy is bound to fail because he is intent on holding down the gross wages of all wage earners? Wage earners are interested in their net take-home pay. Out of any £10 increase, the average person


is lucky if he is left with £3·50. That is why this policy cannot succeed.

The Prime Minister: I acknowledge the hon. Gentleman's sincerity in this matter, but I am always being told by people why policies will not succeed. My right hon. Friends and I are as aware as anyone else of the difficulties of maintaining these policies. The hon. Gentleman would help us more if he would put forward practical proposals—I do not ask him to interrupt me again—for making policies work, so that people realise that high productivity will ensure higher wages that really buy something.
It is not a question of how high the wages alone are; it is a question of how much those wages will buy. Although our prices have been dragged up through the Common Market agricultural prices, they are still much lower than in other countries.

Mr. Tebbit: Mr. Tebbit rose—

The Prime Minister: Perhaps I could proceed to the next part of my speech. Somehow, I do not think that the hon. Gentleman is going to approach this question with the sincerity of his hon. Friend the Member for Norfolk, North (Mr. Howell). I do not think that he is going to try to help me, or even help the debate forward. I am very sorry—

Hon. Members: Resign.

Mr. Speaker: Order. It is clear that the Prime Minister is not giving way to the hon. Gentleman.

The Prime Minister: I am always interested in cries that the Government should resign. There will be a decision on that matter this evening. Therefore, I do not take up the immediate cry. I should, however, like to refer to last night's vote. It is always possible for hon. Members of different parties and different beliefs and policies to combine in an uneasy and temporary alliance against the policies of the Government. They may dislike the policies on which they are voting, for diametrically opposed reasons. They may dislike one another even more.
I remember what was said about the right hon. Gentleman the Leader of the Liberal Party. There is only one Lobby for them to walk through and so they

had to walk through together. Last night, we had the spectacle of the hon. Member for Cornwall, North (Mr. Pardoe), that arch-supporter of the view that all incomes should be fixed by parliamentary statute, walking hand in hand through the Division Lobby with the right hon. Lady who believes that in no circumstances should Parliament have anything to do with wage bargaining. That was a marriage of convenience if ever there was one, but the bridegroom deserted the bride almost as soon as they got out of the register office.
We know very well that the Liberal Party intends to vote with the Conservatives tonight. We know that the Liberals want an election. The right hon. Gentleman told us so again this morning on the radio. He said that they would vote against the Government this evening.
It is strange, is it not, that up to this autumn the right hon. Gentleman was not only able to support the Government in the policies that we carried out then and are continuing to carry out—policies to control inflation, reduce unemployment and secure social justice—but actually claimed that it was the Liberal Party that compelled us to adopt those policies. That is the reason, he said, why they were so successful. Now, three months later, we continue to follow those policies, but he and his colleagues have deserted. Why? Because they want an election. Was there ever a greater triumph of self-sacrifice over self-interest?
It would not surprise me if, when the right hon. Gentleman's followers pulled the sheets up over their heads in bed at night, they said, "God bless our leader. We are totally behind him. Give him his election. But please, God—not just yet." I have a feeling that they will walk through the Lobby tonight hoping against hope that they will be defeated.

Mr. David Steel: indicated dissent.

The Prime Minister: Then we have the Scottish nationalists. What a pickle they are in. They voted again last night, for the umpteenth time, for the Conservatives —a fact which will no doubt be noted in Scotland, especially the West of Scotland. Each time they get the chance of supporting, as opposed to wrecking or delaying, the referendum provisions in the Scotland Bill, they vote for the Conservatives


in order to delay it or to wreck it, to destroy it. That happens every time.
Last June, when we were in the final stages of the Scotland Bill, which is now an Act, after a tremendous effort had been made, the Scottish nationalists had the chance to help the Government carry it through on a vote of confidence. Did they take it? Oh, no. Although the whole Bill would have been lost, and the SNP knows that it would have been lost—after months of effort which extended over nearly two years—they voted for the Conservatives.
Nevertheless, to the secret relief of some of them, as with the Liberals, the Conservatives were defeated and the Bill became an Act—no thanks to them. Last night they voted for the Conservatives again, although they know that the referendum date is already fixed for 1st March. This arouses my suspicion that the right hon. Member for Western Isles (Mr. Stewart), for whom I have a great affection, must be carrying a torch for the hon. Member for Glasgow, Cathcart (Mr. Taylor), in view of the votes that he has cast with him on this issue time after time.
Now the Scottish nationalists attempt to escape from their confusion by dangling a red herring in front of us. I am sure that that analogy will not go amiss in Stornoway. They say, "We must know the date of the Assembly election, if the referendum is carried, if we are to believe in the Government's good faith." That is the latest one. Not only is that insulting; it is untrue. They need be in no doubt, after our efforts—despite what they tried to do to delay and defeat the referendum through voting with the Conservatives—that we shall fix the date, a timely date, for the Assembly after the referendum has been carried, as I trust it will be. We shall do it then.

Mr. Gordon Wilson: When he talks about the referendum legislation, will the Prime Minister take on board the fact that the pledge of the Labour Party in the last election was that there would be a Scottish Assembly and that there would be no need for any referendum, and, further, that his own legislation is running two years behind schedule because of the abdication of responsibility by his right hon. and hon. Friends? Does he accept that, when the

time comes to judge roles in Scottish history, his party will be found missing?

The Prime Minister: That really is a lot of humbug. If the hon. Gentleman's votes had been effective, there would not be a Scotland Act today. That is the simple truth. There would have been an election and we should have had to start with the devolution legislation again—and this party would have started with it again. I therefore hope that the SNP will not attempt to trip us up for a fourth time. They have tripped us three times already, and now I understand that they will try to trip us up for a fourth time tonight. Scotland will know whose the responsibility is. We have demonstrated our good faith in giving Scotland a chance to declare itself in the referendum on 1st March and it is time that the SNP showed its good faith in this matter by not voting for the Conservatives and crawling along behind them with every chance it gets. [HON. MEMBERS: "Now deal with the Ulster Members."] Are hon. Members tempting me to discuss the Ulster Unionists? The right hon. Member for Down, South (Mr. Powell) is a unique phenomenon. He is an unguided missile. I would not care to comment on that matter this afternoon.
We face a motley crew on the other side of the House united by nothing. I have no confidence in any one of them or in the whole lot put together. The House must decide tonight. We stand by our policies. We are content for them to be judged and we are proud to defend them, for we have governed this country in the true interests of our people.

4.37 p.m.

Mrs. Margaret Thatcher: The Prime Minister's speech gives little ground for confidence in Her Majesty's Government, either in their record or in their future. Indeed, he hardly addressed himself to the Government's record at all.
One thing is very clear—that sanctions would not have been removed unless we had had a clear victory in two votes last night. They would have remained, in spite of what the Leader of the House, before he held that position, said about them during an earlier debate in the lifetime of the previous Parliament. On 18th March 1974, the right hon. Gentleman said this about sanctions:


 I have always thought that one of the reasons why the discussion of incomes policy, so called has been so difficult has been that, very often, the well-to-do or—even more offensively perhaps—the truly wealthy have been inclined to threaten sanctions or preach sermons to people who have to fight every day of their lives to keep their heads above the inflationary flood. But the threat of sanctions in such cases does not work. It leads to clashes. The sermons prove boring and ineffective. That is what happens."—[Official Report, 18th March 1974; Vol. 870, c. 702.]
Holding those views, why did the right hon. Gentleman ever agree to sanctions being imposed?
We notice also that countries which the Prime Minister admires and whose rate of inflation, productivity, and growth he tries to emulate, do not have sanctions or anything like a rigid 5 per cent. policy, from which he now seems to be retreating. But yesterday he did not dare to submit his rigid 5 per cent. policy to the Order Paper of the House of Commons for a vote to be taken on it. He knew that it would be totally and utterly defeated if he had—defeated by the House of Commons as it was previously defeated by both the Trades Union Congress and by his own party.
The Prime Minister referred to the private sector taking the soft option. Does he really think that Ford took the soft option by having an eight or nine weeks' strike in support of his policy? He referred to problems of unemployment, which he has largely created, and asked what our policies were. Perhaps he will take time to read the excellent lecture given by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) on conditions for fuller employment, pointing out in a detailed analysis of about 15 chapters that jobs come from the consumer, from creating goods which the consumer wants to buy at a price that he is prepared to pay. Jobs do not come from anywhere else. It was quite clear from what the Prime Minister said later about industry, pay and prices that one thing that he is really against is successful industry, and that he is prepared thoroughly to penalise it.
The Prime Minister asked me about our policy for prices. He knows full well that competition has done more to keep prices down than any Price Commission. The irony is that while we have had very strict control on prices in this country

they have risen more than at any previous time in our history. The right hon. Gentleman spoke also of the public sector, but I understand that his pay policy is to hold the public sector to a rigid 5 per cent. except when it gets too difficult, and then of course he will have a special inquiry and it will not be 5 per cent. at all. We supported him over the police pay and defence, and undoubtedly will do so when a similar situation arises in certain other cases. It was his policy to have a rigid 5 per cent.
The Prime Minister referred to the Health Service. It has been under his Government that the Health Service has gone down. During our time there were fewer people awaiting operations, the waiting list actually improved, and there were fewer people on it, because we spent more time trying to create wealth while the right hon. Gentleman has spent time wholly on restraint. In his motion the Prime Minister speaks of being determined. It is a very strange motion. The Prime Minister is determined
 to strengthen the national economy, control inflation, reduce unemployment and secure social justice.
But the Prime Minister has been determined, whether inflation has gone up or down. He has been determined, whether or not unemployment has gone up or down. He has been determined, whether or not the Health Service has gone up or down. He has been determined, whether crime has gone up or down and he has been determined, whether putting the case for or against Europe. Whatever happens the Prime Minister is determined, but we do not get a result. It leads us to think that the only thing that he is determined to do is to try to hang on to the tenancy of No. 10.
The quarrel with the Prime Minister is not with some of the objectives which he puts in this motion. They are unexceptionable. They could have been put down by any Government anywhere in the world at any time, from the USA to the USSR:
 strengthen the national economy, control inflation, reduce unemployment and secure social justice.
Of course. It is the methods that the Prime Minister is prepared to use and the lack of success in achieving the objectives that we criticise.
The Prime Minister did not take very much time on actually considering his Government's record, which is strange, as this is a motion of confidence in the Government. Let us have a quick look at the record of his Government. Let us start with the things with which he preferred not to deal, commencing with inflation. He has forgotten that his Chancellor of the Exchequer fought the last election on the ground that he had inflation licked—that it was already at 8·4 per cent. He has forgotten that he has the worst record on inflation of any Government in this century and, indeed, of any Government for about four centuries in this country. His is the only Government that has halved the value of the £1 during less than five years. He has the worst record on inflation in the same world circumstances.

Mr. John Ellis: Words and slogans.

Mrs. Thatcher: Words? Slogans? Not to the people who have had to suffer this inflation and see their savings reduced by half. They do not talk of slogans; they have felt exactly what Socialism is like. They might have put £100 into the Post Office when the Government of this Prime Minister came in. That £100 is worth now less than L51 —and the hon. Member talks of slogans! The right hon. Gentleman has one of the worst borrowing records in history. His Government have borrowed more money than any previous Government and we are now in the position when we have to borrow massively merely to meet the interest on previous borrowings. That, of course, is a total recipe for bankruptcy. His borrowing has been so great that he has had to shove interest rates up to over 12 per cent., which undoubtedly is responsible for people saying that he is quite hopeless at handling economic affairs now.
In industry the Prime Minister has a policy of encouraging success. I cannot think what happened to it because the moment he got in all he seemed to do was to reward failure and punish success. This week we heard a speech by the Governor of the Bank of England, who was putting forward policies that have been put forward from this Dispatch Box many, many times.

Mr. Robert Hughes: We are not surprised at that.

Mrs. Thatcher: Perhaps the Government would do better to heed them, which would be better for the home value of the pound as well as its overseas value. The Governor of the Bank of England pointed out that if the Government go on taking as much of the national income as they take now there will be little room for the private sector. There will be a continual crowding out of the private sector, and we shall not get the increase in wealth which is the only source for better social services, better prosperity and better pensions. He said that it would require a great deal of courage to do some of these things. He did not indicate whether he thought that this Government had it. It would include a readiness to adjust the balance of taxation and to increase personal incentives—thus promoting a climate more favourable to initiative and enterprise—and a willingness to work for a better living. Those are perfect Conservative policies, but they are policies that will never be put forward by this Government.
The Prime Minister spoke of the money supply but he was not very clear whether he supported the Chancellor of the Exchequer's present policy or not. The Chancellor of the Exchequer has talked about 6 per cent. or 7 per cent. this year—not very far wrong, if I may say so; just about right—but it did not seem that he had the support of the Prime Minister at all. Is the Prime Minister for or against having an appropriate money supply for the increase that one expects in output in the economy? It was not exactly clear from what he said.
The Prime Minister's record on unemployment is as bad as his record on inflation, and this is an extremely important point when people consider the record of a Government and how they shall vote next time. Over the lifetime of this Government there has been a tremendous increase of about 731,000. Added to that, the right hon. Gentleman has achieved the extraordinary double not only of increasing unemployment but of having a considerable shortage of skilled labour. We know why; because the continued incomes policy of the type that he has chosen—he did not have to choose that type—has deliberately compressed differentials, so that he cannot get skilled engineers to go into industry. That is one of the problems that is facing


us today—one of the problems that he is totally ignoring.
The Prime Minister has had the good fortune to have a great deal of North Sea oil coming ashore. This year, taking oil and gas, the net effect on current and capital account is expected to be about £4·3 billion. Even with that he can only just achieve a balance of payments. The record without that tremendous free enterprise achievement would have been appalling indeed. We are finding that through his economic policies industry is totally uncompetitive and the level of imports one of the worst that we have ever known.
We are finding also that the social services are not better but are indeed a good deal worse than before, so the extra expenditure we have had has not gone to improve the social services in any way.
That is the record that the Prime Minister did not tell the House about, and that perhaps he would rather not have heard. The Prime Minister asked me what are our policies on incomes and pay. It seems to be part of his objective to get the whole of the debate on X per cent., as if the highly complex questions that face this country could be dealt with just by any statistical percentage. Of course they cannot. The problem is much more complex and varied, and any approach on incomes policy must be regarded as part of a total approach towards the economy. We have not exactly heard that from the right hon. Gentleman. Part of its must be restraint on Government expenditure and borrowing. That is one of the main problems. The Government take such a large proportion of the national income —52 per cent.—that there is just not enough either for incentives to individuals or for incentives to industry. Until the Government try to match the restraint that they expect from individuals with restraints in Government spending and borrowing, we shall have no chance to reduce inflation or to increase prosperity.
This was all said in the debate on the Queen's Speech. The Prime Minister appeared to quote a speech of mine which was supposed to have been made at Penistone. As a matter of fact, I made no speech at Penistone. I did, however, make a speech at the Conservative Party conference. When speaking of the prob-

lems that face us and the levels for increased pay, I spoke of the desire to have more, and I said:
 But where is this ' more' to come from? There is no more. There can be but there won't be unless we all produce it.
That is the key. But the Prime Minister's policies give no incentive whatever to bring about extra output. They give no incentives to those who are capable of starting small businesses, building them up, and taking on more employees. Incidentally, it is the small businesses that we have to thank for the availability of bread in the last few weeks. Those small businesses are to be congratulated. We should note that they did not attempt to put up prices in any way. We got our bread, despite some of the worst efforts by some trade unionists.
Our policy must involve a reduction in Government spending as a proportion of national income. The present Government will never make such reductions. Their whole philosophy, as expressed by the right hon. Gentleman the Secretary of State for Prices and Consumer Protection yesterday, was that he and the Government know better how to spend people's money than people do themselves. That is the collectivist approach of Socialism. It does not want people to have more of their own money in their own pockets to achieve their own independence and to spend it on what they desire, on houses they wish to have, or on their own children. Socialism prefers to take away that money and to spend it through the collective genius, if I might put it that way, although I doubt it, of the Government.
The Labour approach to Government expenditure has always been interesting. They feel that whatever they think is necessary—we are not told exactly what they think is necessary must somehow be raised by taxation. But the fact is that people have rebelled against high taxation. The fact that we were able to push through tax changes against the Government—they were Tory and Liberal tax cuts—illustrates the failure of the Government's expenditure policy.
There was one Chancellor of the Exchequer who managed to match his expenditure—

Mr. T. W. Urwin: On a point of order, Mr.


Speaker. Is it in the best interests of the House for several Tory Back Bench Members to sleep while their leader is speaking?

Mr. Cranley Onslow: On a point of order, Mr. Speaker. Is it not wholly against the traditions of debate in the House that the Prime Minister should have sent a message to his supporters, through the Whips, to whisper and try to disturb my right hon. Friend in her remarks?

Mr. Speaker: Order. What is in the best traditions of this House is that on a major occasion such as this both Front Benches should be allowed to express their point of view.

Mrs. Thatcher: The hon. Member for Houghton-le-Spring (Mr. Urwin) must have been hard put to it to make that intervention. He did not like hearing the record of the Labour Government. Their performance on inflation is the worst on record. That is true of their record on employment and industry. It also is true of the Government's record on output—which, after all the Labour Government's efforts, is not even back to where it was in 1973. That is the Government's record, and it is on that record that we are judging them today.
There was a President of the United States who had a notice on his desk saying "The buck stops here ". That does not apply to the present Prime Minister. He is always prepared to hand the buck to somebody else. If he has had a bad record, it is always due to world recession, world prices, or something of that nature. However, that is not true, because other countries in exactly the same circumstances have fared so much better than this one under the Labour Government. That is the yardstick by which we judge the Labour Government.
The fact is that one cannot judge pay policies, or policies involving pay restraint, other than against the background of something that is much more important. I refer to policies for the creation of wealth. That is a policy which the Labour Government have never possessed, and they will never do so.
The Prime Minister asked me what our policies are. They are based on the fact that if one seeks to curb and confine free enterprise, it cannot produce the wealth

on which social progress and increased prosperity so largely depend. That wealth depends on the control of the money supply. The Chancellor agrees with that view, even if there is a split between him and the Prime Minister. It depends on reducing the proportion taken out of the economy by Government expenditure and on increasing the proportion spent by the citizen and that which goes to the marketable sector. It depends on having an incentive policy of taxation by reducing personal taxation at all levels. Unless these things happen, we shall not get the extra skills, the managerial expertise, or the small businesses that we require.
When I go round construction sites or factories, I am often told that the person in charge has the lowest pay and the lowest net take-home pay. That is a ridiculous way to run a country. Because this is the case, people will not take on extra responsibility, and those are the people we need.
We also have a recognition of the need for varied rates of pay. The profit element is the cash limit of the private sector. When dealing with pay claims many companies do not do so on the basis of x per cent. Indeed, they cannot deal with them in that way. They are prepared to operate on the basis that if the company does well, those who work for it will do well. That is a Tory principle, but it does not appear to be a Socialist one. It is ironic that the Prime Minister is seeking to stop that principle prevailing.
We need to divide up the added value in respect of the wage element, and there must be enough for investment, some profits and the inevitable tax. All these matters have to be dealt with when considering policies of pay restraint.
The Prime Minister did not say very much about his own policy. Indeed, he asked for an expression of confidence in the Government's policy. However, he was less than frank in explaining the general lines of his expenditure proposals or his strategy.
We have had two indications—indeed three indications—of what Government policy amounts to. First, we had the Labour Party programme of 1976 fully endorsed by the Labour Party conference. Then we had "Into the 80s ", a document


agreed betwen the TUC and the Labour Party, and last wekend we had the leaks on the manifesto, which I understand contained nothing new but was a scissors-and-paste job.
There is not much doubt about what the Government have in store. The Government try to conceal some of these deficiencies under the phrase "a mixed economy ". That phrase conceals the fact that under this Government the economy is getting progressively less mixed on the free enterprise side, and more and more mixed on the nationalisation, public ownership and State control side.

Mr. Ian Mikardo: I wish that it were.

Mrs. Thatcher: I am grateful to the hon. Member for Bethnal Green and Bow (Mr. Mikardo) for confirming what I suspected was the case.
There is not much doubt about what the Government have in store. There will be further substantial measures of nationalisation. Where they cannot nationalise, they will take over control—as, for example, in regard to people's savings in pensions and insurance funds. They will reduce the citizen's capacity for independence by imposing higher taxes, there will be cuts in mortgage relief, cuts in defence, and so on.
All these things the Government have in store. The only question is not about the ends but about the pace at which the Government propose to move. What the right hon. Gentleman failed to say was that if these policies were put into action they would put paid to any attempt to halt inflation and to secure a better standard of life in Britain.
Is the Prime Minister as loyal a supporter of Labour Party policy as the Secretary of State for Energy? I know that the Prime Minister likes to distance himself from these matters. Or is the only difference that he wants to keep the programme under wraps for the time being? Is the argument about ends, or about the pace at which these proposals should be introduced?
The Prime Minister asked the House to express confidence in his Government. He did not tell us what his immediate policies on pay and on economics were. A Government without a policy is nothing. Over and over again, the Prime Minister in-

sisted that the 5 per cent. pay restraint was essential to his Government's whole strategy. We have had that time and again. Many of us think that the 5 per cent. was thought up just in time for an election, assuming that there would be one. The Prime Minister hoped that the TUC would approve it for the time being, so that later, after an election, and if he won, he could virtually deliver the country to further TUC power. Unfortunately, the election did not come. The TUC rejected the policy. The Labour Party, on whose electoral support a Labour Government must rely, decisively rejected that policy. Now the House of Commons has rejected it.
According to the Chancellor, only sudden and large deflationary cuts in public spending and heavy increases in taxation are left for him to implement. Will the Labour Party support those? Will they help to restore prosperity to industry and create jobs for the unemployed? The Government are left with no vestige of an economic policy that is relevant to the country's needs.
What else in the Government's policies are we to feel confident about? Are we to feel confident about the Government's foreign policy—about the Foreign Secretary's handling of the Rhodesian crisis? Are we to feel confident about the Home Secretary's dynamic approach to the problem of crime and violence? Are we to feel confident about the state of the National Health Service?
The fact is that the Government have no policies to deal with any of these problems. They have no policy except a determination to cling to the sweets of office without effectively discharging any of the responsibilities of office. It would be better if we told the people the truth—that this Government and this Parliament are dying and that the time has come to rid ourselves of yesterday's men and give Britain the chance for a fresh start.

5.03 p.m.

Mr. Geoffrey Lofthouse: I am sorry that so many hon. Members should be leaving the Chamber as I rise to take the opportunity of making my maiden speech and of attempting to bring to the notice of the House what the people of the outside world are thinking and what they want. After my experience over the past three or four weeks in this House, I am beginning to wonder how many hon. Members,


especially those on the Opposition Benches, realise what the people at home want.
I understand that it is customary, when delivering a maiden speech, to refer to one's predecessor. Even if that were not the custom, I would not have been able to make my first speech in this House without referring to the late Joe Harper. I was a personal friend of his. We both had our origins in Featherstone. I felt his loss deeply, and so did everyone in Pontefract, Castleford and Featherstone, because he was their friend too. He was a friend in the true sense. People could always accept what he said, even if he disagreed with them. They knew that he was speaking the truth as he saw it, no matter how unpopular it might be. He never coveted popularity and, for that reason, was extremely popular. No duty was ever too small for him and no burden ever too heavy. He remained always one of the people, outstanding because he had extraordinary common sense and judgment. He wore himself out in the service of the people. We shall certainly miss him.
Although I have been associated with the late Joe Harper for all of my life, and was well aware of his outstanding abilities, it was a little frightening, in my early days in this House, when being introduced to different people, to have almost every one of them, from all parts of the House, bring to my attention the fact that I have a great deal to live up to. I hope that as a result of our close association over the past 30 to 40 years some of Joe's abilities and integrity will have rubbed off on to me.
My constituency is a varied one. It has two super Rugby League teams, in Featherstone and Castleford. Like the incomes policy, they have lost a few points recently, but I assure the House that they are on the way back. My constituency has an ancient castle, fine buildings, good libraries and excellent schools. It has a progressive district council, which is trying to uplift and enhance the area. It also has slag heaps galore.
I am delighted when I hear of the concern for the environment which is being shown in connection with the development at Selby. This means that the people there will not suffer what we have suffered. We believe that it is time that some

consideration of a financial nature was given to those of us who have lived our lives amid the dereliction of opencast mining. Our parents and our parents' parents have suffered in the same way, and we shall continue to suffer for a long time to come. Cannot the same concern be expressed about us as is expressed about the "pretty places," or is it a case of "they are used to it, it doesn't matter."?
The inner cities have their problems. Quite rightly, money has been forthcoming from Government to assist them. We have similar problems of decay and dereliction. Because they are on a smaller scale, it is easy to dismiss them. If the problems are left to fester, there will be a stronger drift away from the freestanding towns, to the pretty houses being built in Selby, with the result that the public money invested in our schools, housing, water and electricity supplies, will lie idle while more will have to be spent elsewhere. I do not wish to be a prophet of doom and make a gloomy maiden speech, but I point out that it often seems to us that the largest cities get everything, to the detriment of the smaller towns.
In my constituency we need a greater diversity of employment, for men and women but especially for men. We need national assistance to get rid of the eyesores of the coal tips, which are the byproducts of the wealth of the country and which have created ugliness for our area. How long must we wait? My constituency is at the centre of Britain and of a rapid communications network involving the M62, the Al and the Ml. If my right hon. Friend the Secretary of State for the Environment would like to send money to us now, it could be there in two and a half hours' time.
I well remember the reports in the press of the maiden speech of my predecessor. One newspaper referred to it as fresh air sweeping through the House of Commons. I do not profess to be able to create fresh air. There has certainly been a lot of air created during the past month when I have been here—from the Opposition Benches. It has not been so fresh. The wishes of the electorate in Pontefract and Castleford are still fresh in my mind. During the election compaign it came over clearly that the majority of the people whom I met, with whom I have


lived all of my life, felt that the main priority was to support the Government in their attack upon inflation and in their attempt to control it. That is what they mandated me to do. I am not here for the sake of making party political points to the disadvantage of Britain. If I were so to do, my electorate would never forgive me. 
It is only a short while ago that I left heavy industry. Therefore, I can speak on it with some authority. I have some first-class knowledge of the immediate past in industry. Those in heavy industry, and certainly those in the mining industry, of which I am privileged to he a part, do not want wage claims and wage awards that will create inflation. The miners in my area and throughout the country have not forgotten the 1970–71 Wilberforce awards. At that time they enjoyed probably the highest wage increases that were ever awarded to the industry. In a matter of months those wage increases did not mean a thing to them. They represented merely confetti money and their purchasing power was just not there.
The message has come to me—I have been instructed so to inform the House, including my right hon. Friend the Prime Minister and the Government—that what is needed is an increase in real wages and that that can be achieved only by the policies of my right hon. Friend the Prime Minister and the Government.
I do not want to let the occasion pass without referring to the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe) in yesterday's debate. I refer to column 782 of yesterday's Hansard. The right hon. and learned Gentleman made reference to the productivity deal in the mining industry. He and others should get the facts right before they briefly refer to percentages. That is tantamount, without assembling all the facts, to misleading the House.
I can speak with some knowledge on the mine workers' incentive scheme as I have only recently ceased administering that scheme. The comparison made by the right hon. and learned Gentleman of the first three months of this fiscal year with the first three months of the preceding year was not representative of the scheme. I admit that the scheme was negotiated

area by area and was introduced piecemeal. The scheme started in late December in parts of Nottinghamshire and spread steadily throughout the coalfields until the last coalface agreements were being completed in late March and April. That meant a slow build-up in the early part of the year. Pits had to settle down to operate a unique and novel system that was extremely complicated. The effect was patchy at first and gave a low overall average increase rate.
Results have steadily improved as time has passed and the teething troubles have been overcome. In the first 36 weeks of the current fiscal year productivity at the coalface was 10·8 per cent. better than for the same period last year while overall productivity is 3·9 per cent. better. All that is against a background of falling productivity in the previous three or four years. To show that this is a progressive trend, the same result for the most recent 13 weeks up to 2nd December is an improvement in face productivity of 12·3 per cent. and overall of 6·2 per cent. Deep mined output is now more than 500,000 tons up on the same period last year, again showing a complete reversal of the trend of the past three or four years when production as well as productivity declined. Perhaps the most significant fact is that this has been achieved with 7,000 fewer men than at this time last year.
If we assume that those 7,000 men had been available and had been producing, at a conservative estimate, 10 tons a week per man, they would have produced an additional 70,000 tons per week, or a revenue of more than £5·5 million for the fiscal year. Even without those 7,000 men we have increased output by about 500,000 tons. It is not right to suggest, as was suggested yesterday, that the miners' productivity scheme is merely a myth. That is not true. Based on my own experience, I can tell the House that it is working and that it is cutting even. I have made these statements because the House could have been misled by the remarks of the right hon. and learned Gentleman.
As I have said, I come to the House to throw my weight behind the No. 1 priority, namely, that which is most beneficial to Britain—country first, politics second. It has been proved beyond a shadow of a doubt that the Government's


policies are working and that the Government should be allowed to remain in office to conclude them.

5.16 p.m.

Mr. Peter Walker: I am sure that the whole House will wish me to congratulate the hon. Member for Pontefract and Castleford (Mr. Loft-house) on an eloquent and confidently delivered speech. It was full of the common sense that we always associated with Joe Harper, the hon. Gentleman's predecessor.
The House sadly misses Joe Harper. He was popular on both sides of the House. He made a considerable contribution to not only the Labour Party but the House of Commons as a whole. To judge by the hon. Gentleman's maiden speech, he, too, will be making a similar contribution. I am sure that both sides of the House will look forward to hearing him on many occasions in future.
The debate is remarkable in that the Prime Minister has announced that, due to a vote yesterday, the Government have abandoned what the right hon. Gentleman previously described as the main plank in the battle against inflation.
When I was listening to the Prime Minister I was reminded of an occasion when a predecessor of his, a leader of the Labour Party, was speaking as Leader of the Opposition. He, like the Prime Minister, used many phrases about courage, and fighting for this and fighting for that. I remember Harold Macmillan turning to me and saying that he had known many courageous men in his life and that the only thing they all had in common was that they seldom spoke of courage.
Considering the Prime Minister's position in our economic scene, and having listened to his speech, I detected little in terms of real courage. The Prime Minister is presenting an economy that is doing rather well. He used phrases about unemployment reducing, production beginning to rise, and the rate of inflation improving. The whole atmosphere was that everything is going swimmingly and that if we stay with him it will be even better. On behalf of his party he has created the biggest and the most successful pre-election boom that

we have seen in post-war Britain. The standard of living of the British people this year has increased in real terms by between 6 per cent. and 7 per cent. That is a staggering achievement. It will be a boom Christmas for the retailers. More new motor cars will be registered this year than in any post-war year. Half of them will be foreign cars.
The Prime Minister has created that condition not by any remarkable achievements of a Labour Government that have improved production and not upon the base of any great improvement. We have the measure of the achievement of the Government. It is described in two basic statistics. The first statistic is that manufacturing production for the lifetime of the Government has decreased by 1·6 per cent. The second statistic is that manufacturing wages have increased by 114 per cent. That is the measure of the strength of the economy.
A condition has been created where there can be a pre-election boom based upon three factors. The first factor is last year's improvement in the terms of trade, which represented a substantial improvement. Probably that is a once-for-all benefit for our future prospects. The second factor is the benefit of North Sea oil. This year North Sea oil has brought an improvement to our balance of payments of £1·4 billion. The third factor is that the Chancellor has once again borrowed a substantial sum, namely, £8·5 billion.
In his first Budget speech the Chancellor said that the worst handicap that he had inherited from his Tory predecessor was a public sector borrowing requirement of £4·5 billion. In his first Budget speech he told us that he would reduce it to £2·7 billion and that thereafter he would eliminate it. In fact, he doubled it the next year, he trebled it the year after, and it has remained at massively high levels ever since.
The economy that this Government leave at the end of their term of office is an economy deeply in debt, with a debt servicing bill of £9 a week for every family in the country, a public sector wage bill which now amounts to £44 a week for every family of four in the country, stagnant production, and an economy which we know is not competitive by world standards.
What do we find when we measure the balance of trade going on at the present time? We have had the benefit of North Sea oil and we have had the benefit of the terms of trade, and yet those benefits are dissipated by a massive import of manufactured goods. Two years ago we had no benefit at all from North Sea oil. This year we benefit by a figure of £1·4 billion. But this year we shall have imported, in finished manufactured goods, £5·6 billion more than two years ago. Four times the benefit of North Sea oil, therefore, is being dissipated in the pre-election boom organised, managed and arranged by the right hon. Gentleman.
In those conditions, does the right hon. Gentleman expect to create an atmosphere of sacrifice? The problem of the right hon. Gentleman is that the basis of his strategy was a voluntary incomes policy. His only problem is that there are no volunteers. Trade unionists who asked for only 5 per cent. would be the subject of a Bateman cartoon. There are not any such trade unionists. Well, that is a lie. I inquired whether there were any, and I gather that one agreement has been made, without any strings attached, without any attendance allowance, without any production agreement. I am told that this was achieved by the wages council for the wigmakers, feathermakers and allied trades. Apart from that, the claims have been 17 per cent., 20 per cent., and 40 per cent. That is the atmosphere of the economy.
What is tragic is that while the Prime Minister is evading the realities of the economy this afternoon by saying that it is all going splendidly well—based not on his achievements but on factors largely outside his control, other than the achievement of borrowing a substantial sum of money and putting us further into debt—the country goes on escaping the basic weakness of our economic position.
All three major parties in this House are agreed—at least, the leadership of the three parties are agreed—on the importance of incomes restraint. The Labour Party says that it wants to achieve this by a voluntary incomes policy, but there are no volunteers. My right hon. Friend the Leader of the Opposition, quite rightly

and sensibly, says that she wants to achieve it by responsible free collective bargaining. The tragedy is that there is not much sign of the availability of responsibility. The Liberal Party wants to achieve it by a statutory incomes policy, but with 13 Members of Parliament it does not have very much chance of introducing a statutory incomes policy.
We have a position, therefore, in which all three political parties are agreed on the necessity of incomes restraint. The real problem is that nobody wants to admit that that desire to obtain incomes restraint is not being achieved because of what the Prime Minister described as employers taking an easy route in order to settle with the unions. It is not being achieved because at this time the unions have decided to exercise their economic power to obtain increases in incomes way beyond what the Prime Minister, the Leader of the Opposition and the Leader of the Liberal Party consider to be sensible. Therefore we continue to go on in the way that I have described. No doubt, we shall borrow some more money. We shall use up not just this year's North Sea oil revenues but several more years of North Sea oil revenues.
We see areas gradually crumbling. The hon. Member for Pontefract and Castleford mentioned his desire to improve the environment of his area. I think that I can say that, when I was Secretary of State for the Environment, more slag heaps were removed from the hon. Gentleman's part of the country than at any other time. I remember launching the campaign for the massive improvement of old houses. It is under this Government that the housing programme has collapsed. It is under this Government that the derelict land programme has gone back. It is under this Government that the improvement of old homes has stopped, while 250,000 construction workers are unemployed.
This Government, by using courageous phrases and the right sounding oratory, are trying to create the facade that they are facing the realities of the economic scene. In fact, they are hoping to sweep back into power by the deceit of a pre-election boom, based upon borrowed money and the improvement in last year's terms of trade. If they succeed in doing that, the country may still be left with the appalling problem of not facing the


economic realities which confront this country.
I believe that the Prime Minister pas ailed to give the right lead to the country. We have had a Chancellor of the Exchequer who has blustered and bullied at the Dispatch Box for four years. They have been four years of declining production, four years of increasing debt, and of dissipating the benefit of North Sea oil. At the end of it, the country is producing less, it has less opportunity, and it is competing less than ever before. For those reasons alone, I hope that the Government will be defeated tonight.

5.26 p.m.

Mr. Ronald Atkins: I. add my tribute, Mr. Deputy Speaker, to the speech of my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse). It was a very able speech, and the great quality of it was its sincerity. In that respect, my hon. Friend is a very worthy successor of Joe Harper, who was dedicated to the Labour movement. Indeed, I know that within hours of his death Joe Harper was working for that movement. In bringing sincerity to this House, where it is badly needed, my hon. Friend has brought a breath of fresh air. Unfortunately, I have to disappoint him by saying, with equal sincerity, that when I voted for the Government last night it was not because I had complete confidence in the Government's policies but because I had complete lack of confidence in the Opposition.
Both Front Benches seem to be obsessed with the view that wages and money supply are the causes of our problems, and that we can overcome them by budgetary controls. Both Front Benches have held these views. Some change in their views occurs when they move from the left to the right of your Chair, Mr. Deputy Speaker, or vice versa. But the problems are only symptoms of the disease. No one with cancer of the skin would treat it with vanishing cream. It needs to be burnt out. The trouble is that in this House we have for too long not dealt with the essential problems.
I should like to refer to a study made by eight economists into the effectiveness of Government economic policies. It is entitled "British Economic Policy 1960–74 ". It was financed by the Treasury and produced by the National Institute of

Economic and Social Research. These years, let it be remembered, include two disastrous periods of Tory Government. The right hon. Member for Worcester (Mr. Walker) was a notable member of one of those Tory Governments. The dates also include a period of Labour Government, when that Government had to pick up the pieces. In the study there is criticism of both Conservative and Labour Governments and, incidentally, there is also criticism of the Liberal Party.
Mr. Frank Blackaby, the editor, writes:
As an economic policy, demand management is not enough.
Let us remember that each party has been guilty of this. The writer goes on:
In sum, the problem of devising policies appropriate for a country with a relatively inefficient manufacturing sector, and an unreformed pay bargaining system, remained unsolved.…Industrial policies seem limited to a peripheral role of tidying up the edges of the economy, rather than providing any central thrust to alter and improve industry's performance and that of the economy as a whole.
On industrial relations, the study says that an assessment of the policies pursued by Governments of both parties:
 suggests that, in so far as new forms of legal regulation "—
and we must not forget the legal regulations of the Conservative Party when in power, and the demands of the Liberals—
 contain provisions designed to curb industrial action by imposing new constraints on unions, this certainly did not help, and indeed, possibly hindered, the longer-term objective of reforming collective bargaining practices and institutions. Such measures tended to exacerbate industrial conflict in a way that was politically counter-productive and proved particularly harmful when the Government concerned was trying simultanously to develop an effective counter-inflation policy.
The Government are, of course, aware of the relative decline of the British economy in the world. Indeed, the Prime Minister recently stated at Question Time that this decline started after the First World War. In fact, the general opinion is that it started over 100 years ago. Certainly, in the 1880s Lancashire cotton was being driven out of many markets by the Americans using the ring spindle, and was saved by the protected market of the British Empire, especially in India.
A decade or so later, Chamberlain—then a Liberal—led a campaign of business men in the Midlands for protection against German imports competing too well with Birmingham goods. No one can


say that this early British decline was due to Government interference. We could not have had a freer market. It can even be said that in Germany Government intervention helped industrial progress, as it has done since in other countries, especially in Japan in the 1950s and 1960s.
Even in the nineteenth century Bismarck was aware of the need for higher education in science and technology, and at that time established technical institutions when the basis of education in English public schools was a mixture of classical, stoic philosophy and Anglicanism, which today is inappropriate to modem business practice and much else. We have not yet caught up in respect of education.
At the same time, we had an empire, at once a drain on the public purse and a protected market which sapped the competitive spirit. But the chief factor in Britain's decline was that we were lumbered with a lot of out-of-date industrial equipment and machinery owing to our early industrial start, at a time when our competitors were starting from scratch. This was apparent even in 1913, when an official report showed that there was more skilled labour in the United Kingdom, and more obsolescent equipment, than in the rest of the world put together. In other words, even in 1913 Britain needed much new investment, and the position got progressively worse.
The best opportunity for investment came in the 1950s and early 1960s, when the terms of world trade came back in our favour. Our competitors—Japan and Western Europe—grasped this opportunity, at first equalled our performance and then passed us, progressively increasing the gap between us until it is now almost impossible to close. It should be remembered that this period was a period of 13 years of unbroken Conservative Government.
In his book "Development of the British Economy 1914–ofessor Sidney Pollard has suggested reasons for this lack of investment. The strongest reason he advances, based on a consensus of economic opinion, is that British investors were deterred from investment in the United Kingdom by a series of stop-go policies caused by financial crises based on the loss of exchange abroad. The cause of this was not imbalance of

trade but, mainly, the cost of keeping British military forces abroad and paying for them with foreign currency. There was also a loss of exchange from British investments abroad, but this was a poor second. Even today, there is a loss of exchange of probably between £600 million and £700 million on maintaining troops abroad, particularly the British Army of the Rhine.
However, today—with increasing oil revenues—Britain is in a position to invest heavily at home. It is clear that private investment, which has failed the nation for so long, will not be enough. There must be Government action, as there has been by our leading competitors in the Far East and in Europe, to provide —in the words of the National Institute of Economic and Social Research:
 that central thrust to alter and improve industries' performance and that of the economy as a whole ".
The Labour Government are aware of what has to be done. The Conservative Opposition do not have a clue, or they would not have opposed Government actions to revitalise British industry or even to save it from dying. The Government have pushed in the correct direction. They now need courage to make a thrust. If they do, they will have the support of the Labour movement and of the nation for ever more.

5.37 p.m.

Mr. David Steel: I was fortunate to catch the eye of the Chair in yesterday's debate, and I spoke at length then on the economy and on my party's views on the counter-inflation policy. The House will therefore appreciate it if I now do not dwell too long on it in this no-confidence debate. I therefore want to be very brief.
In his opening speech, the Prime Minister quite understandably castigated the Conservative Party, the Liberal Party and the Scottish National Party for what we did last night. He carefully left out, judiciously, the right hon. Member for Down, South (Mr. Powell)—" the unguided missile ", as he described him. He also left out one group which shared in the responsibility, namely, his own supporters. I thought that that was a striking and strange omission.
We now learn from Question Time this afternoon that the Prime Minister believes


in the doctrine of going to bed by 11 o'clock at night. That explains why he listens to me on the radio at breakfast time. But I would appreciate it a little more if he actually listened to, or at least read, what I said in my speech yesterday, because it was not a short radio interview but a detailed statement of our views. Had he done that, he would not have fallen into the error of using the description of our attitudes which he used in his speech today.
'The Prime Minister described this as the same policy that we supported last year. It is not. I accept that it has the same intention in the Government's mind, but the conditions are entirely different. First, at the time when the Lib-Lab pact was formed in the spring of 1977, we faced a crisis of inflation of about 20 per cent. and we were prepared to accept the policy in the short term, whatever its defects. Second, the great difference between the agreement we made then and the position now is that the policy then had the backing of the trade union movement. What I objected to yesterday was the fact the the trade union movement had withdrawn its support and was putting pressure on companies to increase wage settlements, which resulted in penalisation measures being imposed on the companies. That was not a policy that we could defend. Therefore, it is not the same as the policy we had before.
Again, the policy of the Liberal Party was slightly misrepresented by the Prime Minister, when he referred to my hon. Friend the Member for Cornwall, North (Mr. Pardoe). It is not that we think Parliament has to lay down in detail what the policy is. The key to our position on pay policy is that it must be enforceable, and that can be done in one of two ways. It can be enforceable either by voluntary agreement with the employers and employees—that is, in effect, what the semi-successful policy was of last year—or by the decision of Parliament. It is not acceptable to have a pay policy which is neither enforceable nor declared to be acceptable in the country as a whole.
The Prime Minister said that the Government were entitled to use any lawful means in pursuit of their policy, but I must disagree. That cannot be the position.

Mr. Leslie Spriggs (St. Helens): The right hon. Member is misinforming the House.

Mr. Steel: I am not misinforming the House. The Prime Minister said that it was right for the Government to use any lawful means. I dissent from that proposition. I repeat the example that I gave yesterday of a voluntary organisation, dependent for its work on Government grants, that was told by the relevant Government Department that, if it increased the salaries of its employees above the 5 per cent. level, the grants might be in danger. The same policy has not been applied to the employees of the TUC, for perfectly sensible and understandable reasons. But nobody can say that that is a fair or justifiable policy, even though it is using every lawful means. That is where we dissent from the policy that has been described by the Prime Minister. If the Government want lawful means, let them create lawful means and declare them openly so that everybody knows exactly where they stand.
I believe that the Government—and any minority Government—have only two options. They can construct an agreement with other parties, singular or plural, to form a majority on an agreed programme. That is what the Government did in the spring of 1977. I would argue at length on another occasion that that was a successful recipe for the period that it lasted. Inflation came down. The interest rates and the mortgage rates that we have seen going up again, did come down to quite low levels. That is one option open to a minority Government. But if, as happened in July last, we find that there is no basis for agreement for a fifth Session of Parliament, the other option of a minority Government is to go to the country and ask to be returned as a majority Government. Those are the only two clear options.
I thought that the Prime Minister was less than fair to me as Leader of the Liberal Party when he described what he called our changing of minds. I told him privately in July, I said it publicly at our party conference in September, I repeated it after the Prime Minister's broadcast in October when he did not have an election, we registered it again in our vote against the Queen's Speech in November and we will register it again consistently tonight in the Division Lobby, that if the


Government are in a minority, in the absence of an agreement with any other party it is better to go to the country than to stagger on from day to day.
I have said it consistently, month after month, since the Lib-Lab pact ended. It is quite wrong for a Government to suffer defeats on particular aspects of their policy and to say the next day that they will have no-confidence votes. Will this happen on every Supply Day through the spring and summer? That is perfectly possible, but it is not a coherent and sensible way to run the country. For that reason, we think that the Government should go to the country.
It is perfectly understandable that the Government in their speeches have spent a lot of time attacking the Opposition for not declaring their pay policy. But a vote of confidence tabled by the Government is a vote about the position of the Government and not about the policy of the Opposition. I, too, would welcome the Conservative Party stating its policy. But that is a matter for argument at a General Election when people can then see what Conservative policy is.
Mr. Levin, for once, had it very well summed up on Friday 13th October in his column, when he talked about pay policy. He referred to the right hon. and learned Member for Surrey, East (Sir G. Howe). He said:
Sir Geoffrey called not for free collective bargaining but for 'realistic, responsible ' free collective bargaining, which gives a future Tory government quite as much elbow-room as is necessary to develop any incomes policy it pleases, up to and including a statutory wage-freeze, backed by martial law and the threat of deportation to Australia for anyone who attempts to break it.
That is the position. The options are open, but during an election the Conservatives would at least have to tell the country what they would actually do.
The motion invites the House to express confidence in the determination of Her Majesty's Government to strengthen the national economy. The determination of the Government is not in doubt. I have never doubted the determination of the Prime Minister on this question in the 18 months that I worked closely with him. I have not changed my mind about his determination. But that determination must be capable of translation into action.
I echo what the right hon. Member for Worcester (Mr. Walker) said. The commitment to a pay policy that is effective, even if the commitment is not more closely defined than that, is one which is widespread in this House. The Labour Party, as at present constituted is unable to introduce such a policy and lay it before the House. The Conservative Party might well be unable to introduce it and lay it before the House. For the same reason there are groups within its ranks which are unable to accept it. I believe, however, that it is worth taking these arguments to the people to seek a new Parliament with a fresh mandate within which we can construct a majority with the necessary determination to act in the national interest.

5.46 p.m.

Mr. R. B. Cant: I have listened to speeches from both sides of the House. I am sorry that the right hon. Member for Worcester (Mr. Walker) has gone, because I was about to pay him a tribute. I shall wait for the Leader of the Opposition to go through the door before I say something that might not be polite.
I was extremely depressed last night and this morning. Before speaking I thought I would read the Financial Times, which is always a great solace to people like myself. I read the review by Joe Rogaly of the new publication Social Trends ". He ends by saying:
 The overall effect of this large compendium of figures remains, however, suggestive of a rather better state of the nation than most commentators indicate. Our politics may be in poor shape, and industrial relations may be fraying our nerves…almost beyond endurance. But the general condition of life is probably better than it ever has been and is certainly in line with that of other advanced industrial nations.
That gave me courage to continue.
The important point relates to the economy. We have discussed—and I have contributed to the discussion—so many of our economic problems in money terms. We have believed—as an overhang of this great Keynesian period through which we have lived—that one can have a demand management situation in which, if only one can get it right, all things follow. This has been followed by the equally hysterical period in which we now believe—as I believe, having


been converted—that monetarism is the solution to our problems.
I stress that until we get down to the state of the real economy of this country—as the Chancellor of the Exchequer has so named it—the future prospects of this nation, given any financial policy, are not very bright.
The reason why I support this Government's continuation in office is a positive one. I believe that they are the only Government with the right approach to the future of British industry and the service economy. If one talks to the people of this country—bankers and working people alike—one finds that they are pro-Labour in a purely negative sense, because they are horrified at the thought of the economic destiny of this country being handed over to the Leader of the Opposition and other occupants of the Opposition Front Bench. The concept that the market economy will solve all our industrial problems is, even to me who is slightly Right of centre, a nonsense in historical terms.
If any impact is to be made upon our declining industries and upon new industries based on microprocessing or biotechnology, the Government must take an important stake and have positive policies towards these industries or we shall have no future at all. It is no use talking about incentives, dynamism and the managerial approach, because we have had it all before.
In my lifetime, spanning the period from the depressed 1930s up to the present day, we have had all the things that the Opposition want—no taxation, no Government interference, and so on. Yet the development of technology and innovation in business enterprises has landed this country where it is. The only hope for us is that we have a Government in office like this one or like the Japanese Government. If there is any economy in the world, outside the Communist countries, which is directed and almost dictated to by the Government, it is the Japanese. Without Government nurture, support and intervention this country will have a very difficult time in the future.
I shall spend the other few minutes of my speech on falling out with the Government. I am in the odd position of not believing in any incomes policy at all. At least, I can claim to be con-

sistent. In 1968, two years after entering the House, I made a speech to this effect. Ironically, the right hon. Member who on that occasion was sitting behind me and who was an ex-Minister kept muttering all sorts of ominous statements about "betraying the party ". That right hon. Member is now a distinguished Member of another place. I had breakfast with him this morning in the hotel in which we were staying. I shall not mention his name, but I said to him "Well, Fred, are you still such a wholehearted supporter of an incomes policy?" He replied that perhaps his commitment fell a little short these days.
During the period that I have been in the House I cannot remember an incomes policy which has succeeded in fulfilling its major objective, which is that of reducing inflation. I know that people could say to me that last year or the year before the Government's policies were successful. But it is no good trying to look at incomes policies in that way. The trend is significant and undeniable. We have had levels of inflation, as a result of an incomes policy of the most draconian kind, that other countries with a more laissez-faire attitude have escaped.
From the point of view of the development of our skilled manpower, we have lost out as a consequence of incomes policies. One cannot escape that conclusion. One thing that really worries me about incomes policies is the element of social divisiveness that they introduce into the body politic in this country. I do not say that they have made any inroads into the freedoms that we enjoy, or that I am against the bureaucrats who operate sanctions from their offices in Whitehall. I am saying that the tensions that have developed between the Government and management, between the unions and politicians, and between the public and the private sector we can well do without. The sooner we look at this and evaluate an incomes policy from that point of view the better for all of us.
I said all this in 1968, and I have not changed my mind. I have been loyal to the Government, whatever my own convictions and whatever Government policy has been followed. I have faithfully marched through the Division Lobbies in full support of the Government. But one can get


locked into a situation. We are not in a state of tabula rasa, if my Latin education has not let me down. We are in a state in which the Prime Minister is here, the Liberals have turned against him and he is obviously worried. If he changes his policy, can he take a step away from the 5 per cent. and from sanctions and say that he is prepared to relive and recollect the emotions of the Labour Party and the Trades Union Congress? He has heard trade unionists tell him to trust them and let them conduct responsible collective bargaining. Many would say that that would be the other extreme, but I would take that risk. I say here and now that however much we are locked into an incomes policy vis-á-vis our political situation, I would still take that risk.
If we have an incomes policy and try to force it through with all the social and economic consequences, the increase in incomes will still be 11 per cent. to 12 per cent. If the Prime Minister and the Chancellor say that there will not be an incomes policy at all, there will still be about the same increase in incomes—11 per cent. to 12 per cent. If one looks logically at the position confronting the private and public sectors—and I say this as a longstanding member of a local authority—one sees that it is not impossible to keep increases down to 10 per cent. or 11 per cent. in the public sector. This is how it would work. The right hon. Member for Worcester was quite right when he spoke on these matters. Just because someone on the Conservative Benches says something, that does not mean that it is automatically wrong. The 16 per cent. increase in the wage bill that we suffered last year gave us 7·8 per cent. inflation, because world prices fell, the terms of trade moved in our favour and the pound became stronger. That may not happen again, but I believe that we should take a chance. I hope that we shall soon begin a period in which we rebuild the bridges to the trade union movement and even management in British industry. I hope that that does not upset my hon. Friends, because I feel that I carry some of them with me in my argument.

Mr. Mikardo: My hon. Friend will not upset us with that statement.

Mr. Cant: I said in 1968 that we were beginning a very difficult process which

must be built on "co-operation, cajolery and education." That is true again. It may be a long process, but I have always believed that persuasion, however difficult and long the apprenticeship, is better than legislation. I have always believed that light is the sovereign antiseptic and the best of all policemen.

6.1 p.m.

Mr. Julian Amery: The walls of the House have reverberated yesterday and today with the pros and cons of a 5 per cent. pay policy and of responsible free collective bargaining, but there is an Alice in Wonderland quality about our discussions. No one believes that the 5 per cent. can be maintained, and there is not much sign that free collective bargaining will be responsible.
Exactly what the mixture is to be has yet to be discovered. On another occasion, if I had more time, I would advance some views on that question, but I wish now to make a briefer point. While we are splitting hairs in the Chamber about the right economic course to pursue, the barbarian is at the gate.
No economic policy will avail us anything if we are denied access to the oil of the Middle East or the minerals of Southern Africa. My principal reason for supporting the vote of no confidence in the Government is that I see no sign of their ability, determination, or even anxiety, to protect our vital interests in those areas. I had my say on our African interests in the recent debate on Rhodesia, and I shall not repeat it.
The sun of my approval and encouragement does not often shine on the Foreign Secretary, but he was right, if not felicitous, when he made a statement recently in support of the Shah of Iran. I cannot say the same of the Prime Minister. His statement on Tuesday that, if events in Iran continued as they have recently, he would not advise the Queen to go there was totally gratuitous.
The safety of the Sovereign must, of course, be the first concern of the Prime Minister, but all he had to say was that he would advise Her Majesty in the light of the circumstances prevailing in February when the time came for her visit. It was also wrong for the Prime Minister to say that a visit by a Head of State did not imply support for the regime of the other Head of State. The Shah is our


ally and there is no reason for us to deny that, when one Head of State visits an allied Head of State, it is a symbol of the solidarity that exists between allies.
The situation in the Gulf is of immense seriousness for our economic future, and the chickens are coming home to roost with a vengeance. A previous Labour Government withdrew from Aden and decided that we should withdraw from the Persian Gulf. If those bases still existed, our allies could reinforce them, even though we might not be able to do so ourselves, but it is one thing to reinforce an existing base and quite another to set up a new one. We are facing grave dangers as a result of the policies pursued by the Labour Party, both in a previous Administration and in the current one, which surrendered our last positions in Gan and Masirah.
I also have no confidence in the Government's handling of our relations with China. The issue of the Harriers has been under discussion for too long. It is high time that a favourable reply was given and that we recognised that, whatever our ideological differences with the People's Republic, it is our friend against Soviet imperialism.
Whatever the outcome of tonight's vote, I do not believe that the Government command the support of a majority of the House. They certainly do not have the support of Conservatives or Liberals or even of many of their own supporters for the policies they are pursuing. It may be that, technically, they will get through, but I wonder whether it is healthy for our constitutional system that a Government should cling to power in those circumstances. I believe that it is not. We should say to the Government, as Cromwell said to the Long Parliament—" You have sat here too long for any good that has come from you ".

6.6 p.m.

Mr. Ian Mikardo: I am normally meticulous about beginning any speech in the Chamber with a reference to the observations of the hon. Member who has preceded me, but I find it difficult to do so on this occasion because, with the best will in the world, I cannot think how the question whether the Queen should or should not visit Iran is highly relevant to whether we have con-

fidence in the operation of the Government's pay policy and sanctions.
I should be happy to debate the points made by the right hon. Member for Brighton, Pavilion (Mr. Amery), but I would not wish a visit to Iran, especially at this time, on my worst enemy, let alone on a gentle and gracious lady who would probably be much more comfortable in any one of her homes than in the city where her embassy has been set on fire.
Let us leave that for another occasion and return to the subject of the debate which is, to coin a phrase, phase 3 of an operation that was supposed to begin on Thursday last week with the sanctions debate that never was. It was continued yesterday and is with us again today. I wonder whether we shall have a phase 4 or a phase 5.
Even though it is manifest that the Government have abandoned their pay policy —and that was done not in the Prime Minister's speech today but in his speech a week ago to the Parliamentary Labour Party—I was a little perturbed when he said that the Government must try again. That made me wonder whether, after phase I last Thursday, phase 2 yesterday and phase 3 today, we might not have a phase 4 or phase 5 in future. I shall say something later to give my right hon. Friend the Leader of the House notice about what might happen if we have other phases.
I had hoped to speak in the debate that never was last week. As I hurried into the Chamber, I was handed a sort of brief from the office of the PLP telling me what I ought to say. In nearly 30 years in the House, that is the first time that I have come across anyone thinking that it was necessary to give members of his party a brief about what they should say.
I read the document with great interest and I wish to draw on it to make some serious points. It said:
 Opinion polls have consistently shown that the great majority of voters are solidly behind our approach to incomes policy.
I say to my right hon. Friend the Lord President, in all seriousness, that I believe that the Prime Minister is making a great mistake. I do not want him to make any mistakes. I want him to win. I want him to lead a successful party in an election. However much I differ from him,


I have a great deal of good will for the Prime Minister. I have been a friend of his for a long time, over 30 years, when we were both at that time together in membership of the Keep Left group. Of course, he has moved a bit since then, as we all know.
I want to warn the Prime Minister not to get carried away by this. He is always saying—he said it today—" Perhaps the House did not go with me ", or whatever. He said it last night. "The country is with me ". He is resting on these idiotic—and I weigh the word—opinion polls. There has not yet been an opinion poll which asked a question that was sufficiently accurate, precise and clear to obtain the view of the country on the matter that we are discussing today. I invite my right hon. Friend—I understand that the Government have machinery for taking soundings of public opinion—to do it. If he does not want to do it, I should be prepared to join with others in financing a real public opinion poll. [An HON. MEMBER: A General Election."] No, a General Election is about many things. I am quite happy to go into a General Election. I am not running away from that. I dare say that my Tory opponent would lose his deposit again as he did last time.
On this specific question that we are discussing today, I shall tell the Prime Minister how one can test public opinion, how one can conduct a poll which is real. One has to ask two questions, not one; not the very imprecise and unclear one which "Mr. Gallup" asks. Question one is: "Are you in favour of all wages and salaries being restricted in 1979 to an increase of not more than 5 per cent. while there is no restriction on incomes that are derived from rent, interest and profits?" That is the situation. Some people in this country get incomes by working for them, and some get incomes without working for them. The only one on which there is a limit is the income which one works for. If one gets an income from rent, interest, profits or capital gains, there are no restrictions at all.
Therefore, one has to ask this question: "Are you in favour of a 5 per cent. limit on increases in incomes derived from wages and salaries with

no restriction on any other sort of income?" That is question one.
Question two is:" If your answer to question one is' Yes ', do you think that this restriction should apply to your own wages or your husband's wages?". Let us not believe anybody who says "Yes" to the first question if he says "No to the second question, because what he is saying is not" I am in favour of wage restraint "but" I am in favour of the restraint of all wages except my own."
There are a great many people who take that view. They are in favour of wage restraint, but they can make what they believe to be—and what in some cases genuinely is—a cogent case for arguing that they are an exception. Unless one can get an opinion poll with a "Yes" to both of those questions, unless a majority of the people say that they arc in favour of wage restriction even though other incomes are not restricted, and that they are in favour of it being applied to their own wages—until one gets that, it is idle for my right hon. Friend the Prime Minister to kid himself that he has got the support of the country.
I shall quote another passage from this document which purported to tell me what I ought to say in my speech. It says:
 Our unit wage costs in manufacturing have recently been rising faster than in any other major industrial country.
That is a little imprecise. It does not say by how much, it does not say over what period, and it does not say what "recently" means. To tell the truth, as one who has looked at some of the statistics of other countries, I am very sceptic about whether that statement is true.
For the moment, let us give the Government the benefit of the doubt and say "All right, unit wage costs are rising ".
On this I make two points. The first is an elementary and, indeed, a rudimentary one. Unit wage costs consist of two things—wages and what is produced by those wages. The unit wage cost is total wage cost divided by the number of units. It goes up when wages go up and/or units go down, and it goes down when wages go down and/or units go up. There are two ways of reducing unit wage costs—by holding down wages or by getting more for the wages that one pays.
My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant), in what was an enormously impressive speech—and if he goes on making speeches such as that he will not be able to continue to describe himself as being Right of centre of our party—made the point absolutely clearly. The plain fact of the matter is that unit wage costs for any given type of product are lowest in high wage countries and highest in low wage countries. If one got prosperity out of holding down wages, Delhi would be prosperous and Dallas would be a slum. Exactly the opposite is the case.
My second point is that all this hoo-ha about unit wage costs is about two things —our competitiveness and the extent to which increasing prices contribute to inflation. But our competitiveness, the final cost of the product, is affected by a lot of other things besides wage costs. Where I think the Chancellor has fundamentally gone wrong—apart from the minor point that he insists that anyone who dares to disagree with His Excellency has got a tiny Chinese mind—is that one never hears a word from him about any other factor contributing to inflation. As far as he is concerned, the only thing that raises costs or raises prices is an increase in wages, the only thing that brings them down is the holding down of wages.
I ask any Member of this House: when have we heard the Chancellor of the Exchequer talking about any factors which enter into product costs other than wages? Indeed, when he talks about confetti money, what he is always saying is "What is the point of getting 10 per cent. more in wages, because prices will go up by 10 per cent.? You will only get the same goods." In other words, he is literally saying that for every 1 per cent. increase in wages there will be a 1 per cent. increase in prices because no other element enters into the fixing of prices.
We all know that that is a nonsense. Certainly any one of us who, unlike the Chancellor, has ever been involved in manufacturing or marketing goods knows that it is a nonsense. If there is any doubt about that, Ford itself has proved that it is a nonsense, because that company has said that it can absorb the 17 per cent. wage increase and keep the increase in the price of its product down to below 5 per cent. Therefore, as far as that company

is concerned, wages are, at most, 30 per cent. of its costs, because 5 per cent. is, as near as damn it, 30 per cent. of 17 per cent. The Chancellor does not understand that.

Mr. Amery: The hon. Gentleman began his remarks by describing me as being guilty of an irrelevance by introducing the question of Iran into this debate. What I was talking about was the importance of raw material prices and access to raw material supplies in comparison with the whole question of pay. In fact I was agreeing in advance with what he just said. Pay itself is only 50 per cent. of the problem. Material costs are at least another 50 per cent. That is what I was trying to say.

Mr. Mikardo: Being a charitable chap, I am glad that I have provided the right hon. Gentleman with the opportunity to find a rationalisation to explain away his manifest and obvious irrelevance. Of course raw material prices enter into costs, as he rightly said. They, however, are a factor over which individual Governments have little or no control. But many of the things that have put up our prices are things which derive precisely from Government decisions and Government policies. No one ever talks about those things. It is only wages that people talk about.
One of the biggest items in any estimator's cost sheet for price fixing purposes is the cost of capital—interest charges. The rise in interest charges has been an enormous contributor to higher prices—I would think at least as much as any wage increases.
The Government's decision to make the fuel and power industries recover all their costs may have been a right decision. I do not know. It is arguable. Nevertheless, it resulted in a very large increase in fuel and power costs, which, of course, enter into the cost of every product that we make.
Some elements of taxation add to the cost of products and, therefore, to inflation. I need not remind hon. Members that some of the EEC directives do all that.
The rise in land values—everything that is made is made in a building standing on a piece of land—is an enormous contributor to costs. The fact that we


have no effective control of margins has great bearing. When we are talking about inflation, we must remember that it is not costs that matter but what people must pay for the goods. Between the costs and what people pay for goods is the profit of the manufacturer, the wholesaler and the retailer. That is a great contributor. My right hon. Friend the Secretary of State for Prices and Consumer Protection exercises a degree of control which does no more than arouse a giggle amongst all those people he purports to control.
Most of all, however, the biggest single contributor to rising prices is high unemployment. If a factory is doing badly—I speak now from personal experience, but other hon. Members will have had the same experience—and is not competitive, and unit costs are rising, one gets someone in to have a look to see why. What is the first thing that he looks at? He looks to see what is the percentage of machine-idle time and man-idle time. Anyone who tried to run a factory on 5 per cent. man-idle time would be thought of as a lunatic. We are running a country on 5 per cent. idle time. The consequence is that the fixed on-costs are spread over a much smaller number of units than we ought to have and that adds very considerably to the costs.
So we have all these factors between costs and price. Most of them—not raw materials, as the right hon. Gentleman said—are directly within the Government's control and are factors that they have totally ignored in the fight against inflation. The Chancellor of the Exchequer never even mentions them in his speeches.
We are talking about—at least, we were; I do not know whether the policy has really been abandoned—the exercise of discrimination against a company and some workers, but not others, who have reached pay agreements, within the law, freely negotiated. I said "some workers but not others." My own union has negotiated more than 20 pay settlements above 12 per cent. The Secretary of State for Employment knows about every one of them. No sanctions.
Would it not be nice to apply sanctions to British Oxygen, and to say to

the British Steel Corporation "You must not buy gases from British Oxygen? Where the heck would the BSC get them from? BSC would shut down. Perhaps we should say to the hospitals "You must not buy gases from British Oxygen.' Given three or four months, they would probably arrange alternative supplies from West Germany and Canada. But what happens during the three or four months? How does one apply sanctions?
Any minute now the oil companies—all British oil companies negotiate together—will make a settlement outside any sort of guidelines with some of their employees—tanker drivers and some others. So what do we do? Do we say to British Airways "You must not buy from any British oil companies?" Do we say to British Rail and to the hospitals "You must find some other means of heating your place?" Do we say that to the schools? What sort of nonsense is this?
The bakers have just settled for 14·4 per cent. However one describes it—one can always describe wage increases in any way one likes—it is more than 14 per cent. What shall we do? Shall we tell the Army that it must not buy bread from British bakers and that it will have to import bread from France? There would be a few hungry soldiers about. What sort of nonsense is all this?
The plain fact of the matter is that what the Government have been doing is not a policy. It is a caprice. A policy is something which is applied equally in all circumstances. A policy which is applied sometimes but not applied in other identical situations is a caprice. The Government are not daft, so we must ask why they do this silly thing of a caprice. The fact is that these sanctions, as we all know, had nothing whatever to do with the Ford Motor Company or with its employees. These sanctions were designed to give the Government a platform from which they could hold down the wages of low paid workers in the public sector. That is what the discussion was all about.
That is why some of my hon. Friends and I in this corner of the Labour Benches are worked up about it—much more than we would be worked up if it were simply a matter of the Ford thing. That is what it is about. It is to give the Government credibility. When the public sector workers come along, the Government will


be able to say "No, you cannot have more. This is the policy. We are determined to carry it out. To prove our determination "—the word" determination "is in the motion—" we have a big company such as Ford and we have beaten it over the head." It is pour encourager les attires. It is nothing to do with Ford at all.
Digressing for a moment, it is the fact that the debate is about low-paid workers in the public sector that makes the attack by the Conservative Party so utterly hypocritical, because everyone knows that if the Tories were in power and had the opportunity—indeed, the Tories' own speeches and their policy documents indicate this—they would be mounting the most massive attack on the living standards of the working class that this country has seen since the General Strike.

Mr. Spencer Le Marchant: Rubbish.

Mr. Mikardo: Given a little leisure, I should be quite happy to quote passages. The hon. Gentleman shouts" Rubbish." I think that he is the best authority in this House on rubbish. He speaks with authority on that matter. However, given a little time, I would be prepared to find passages in the speeches of right hon. Ladies and Gentlemen of the Opposition and in publications of the Conservative Party which bear that out. If the Tories were in office, they would be mounting a massive attack on working-class living standards. That is what all their talk about cutting public expenditure is about. It is about cutting expenditure on the social services, and the rest of it.
I found yesterday and I find today one of the 10 or so big occasions of the 30 years that I have been in this House. But I do not believe that even Conservative Members thought that their Leader rose to it. We saw a very sharp contrast between the attack on the Government mounted by the right hon. Member for Worcester (Mr. Walker) and that which the Leader of the Conservative Party attempted to mount. There were two great differences between those two speeches. One was that the right hon. Member for Worcester spoke from his heart with great fluency, keenness, originality and vigour, whether or not one agreed with him. The other difference was that the right hon. Gentleman composed his own speech.

Here we were on this almost traumatic occasion, and the attack upon the Government was launched by the Leader of the party of Disraeli and of Churchill gabbling away in a monotone a speech written by the fifth most junior partner of Messrs. Saatchi, Saatchi, Saatchi, Saatchi and Saatchi. Ye gods, what an anticlimax it was!
As I said earlier, it is manifest that the Government have changed their policy. That was manifest from a speech which I understand was made by the Prime Minister a week ago at a meeting of the Parliamentary Labour Party. I was not there, so I did not hear it. I was here with others trying to ensure that never again would this House be put into a position in which it voted more than £20 billion without being allowed to look at how the money was being spent. So I did not hear my right hon. Friend's speech. Those who did say that it was obvious then that the policy was abandoned. But why has it gone on so long? It has gone on to save face, not so much the face of the Prime Minister as the face of the Chancellor of the Exchequer.
Now that the policy has been discarded, I hope that it will be properly discarded and will be put into the dustbin of the history of industrial relations. I was a bit worried when the Prime Minister said that we must try again. I hope that the Government do not put it in the freezer and try to bring it out again and dust it down.
I voted with the Government last night with the utmost reluctance and with deep unhappiness. I voted for a policy in which I did not believe and only because I did not wish to be a party to an attack from the Opposition Benches which was manifestly hypocritical. I supported the Government with great unhappiness, but I must tell my right hon. and hon. Friends that I shall not do it again.

Mr. Cecil Parkinson: Until the next time.

Mr. Mikardo: Mr. Deputy Speaker, hon. Members are not supposed to make observations from the other side of the Bar of the House.

Mr. Deputy Speaker (Sir Myer Galpern): The hon. Member for Bethnal Green and Bow (Mr. Mikardo) is


absolutely correct. However, I thought that he was concluding his remarks.

Mr. Mikardo: The offence is greater when the observation which is made cannot conceivably have any basis in fact. The hon. Member, if he is an hon. Member—I cannot even recognise him when he is on the other side of the Bar of the House—has not the gift of prophecy and cannot possibly know.
I say to my right hon. Friend the Leader of the House, who has known me a long time, that I shall not do it again. I shall leave this House rather than do it again. My right hon. Friend and his colleagues must not go on counting on their ability to overtax the loyalty of some of us and expect us to come up smiling again and again.
Now that the policy has been discarded, let it be buried.

Several Hon. Members: Several Hon. Members rose—

Mr. Deputy Speaker: Order. The Chair is very anxious to accommodate the 14 right hon. and hon. Members who are indicating their wish to take part in the debate. That can be achieved if each of them will try to limit his contribution to 10 minutes. I might point out that the right hon. Member for Brighton, Pavilion (Mr. Amery) took only four minutes and that the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) took only 10 minutes. I am sure that all hon. Members can make their contributions and take only 10 minutes each.

6.35 p.m.

Mr. Giles Shaw: In order to shorten the amount of time for which I shall delay the House, I shall not take up any of the remarks of the hon. Member for Bethnal Green and Bow (Mr. Mikardo), and I shall abide by your request to the letter, Mr. Deputy Speaker.
The one aspect about which we must agree with the hon. Member for Bethnal Green and Bow is his general observation that the Government's policy in this area of economic management is capricious and is designed chiefly to be capricious and to be cosmetic. We have to conclude that the case against the Government is simply that they have run out of ideas and are rapidly running out

of time. If a Government endeavour to contain inflation and to operate an economic policy with an economy that is gravely wounded, they cannot afford at the same time to be a Government who have run out of ideas about how to do it and who are rapidly running out of time in which to achieve any degree of success.
The problems are not new, of course. They have been with us for very many years, and we know that many different techniques have been tried—wages policies, borrowing, price controls, Government grants, nationalisation, the operations of the National Enterprise Board, social contracts and free bargaining. Every possible permutation has been tried in order to put the economy right and to generate more jobs and more prosperity. But it is this Government's woeful lack of determination which is the real problem, because they have not the political backing with which to do it. They have no mandate with which to operate effectively. As they cannot command an overall majority in this House, they have been limping along on the basis of one alliance after another and, what is worse, from time to time they have sought alliances outside this House to continue with their version of economic policy.
It was significant that the Prime Minister withdrew the sanctions policy without offering any alternative and without saying that the Chancellor of the Exchequer would announce tomorrow what the Government intended to do. The Prime Minister merely said that the Government would meet the TUC, the CBI and anyone else who might help them to provide a policy which they themselves could not produce. If that is the state of affairs, how can we possibly have confidence in the Government?
The big problem now, with the trade union movement and large portions of the Labour Party so doubtful about the Government's handling of inflation and with the positive rejection last night of what was to be one of the main planks in their battle against inflation, is: where do the Government stand?
The case for consulting the electorate is overwhelming, and that must be one of the two possible ways out of the Government's dilemma. Either they must consult the electorate, and quickly, to provide a Government who have a majority


and can continue to operate strong economic policies, or they must continue to limp on in search of one crutch, one piece of dressing or one blood transfusion after another until eventiually their time runs out.
The country's morale cannot stand this charade much longer. Opinion polls and subtle bits of market research to determine loaded questions with half-truths mixed with half-bricks are all very well, but the morale of the average person in the street today is at a very low ebb, despite what might happen in retail trading or, indeed, at Christmas.
The people know that in terms of negotiating the Government are drifting and impotent in the major councils of the world, whether it be on the EMS, the reform of the common agricultural policy or in search of a solution in Rhodesia. They know that we have a lame duck Government speaking for Britain. That is why morale in this country is low.
We all agree that the central issue is economic. My right hon. Friend the Member for Worcester (Mr. Walker) advanced a most significant argument when he related this to our failure to produce. It is our failure to produce and our low output per man which make up the most significant factor in our overall economic performance. It is a factor under this Government which must be looked at as the most important of their shortcomings.
The Labour Government believe that intervention is the way to redeem the failure to produce. Scores of national bodies have the right to investigate British industry, to tell them what to do and to advise them. British industry can now do nothing about taking management decisions without being told that they must not exceed a particular wage norm or a certain employment practice.
Last year, Ford Motor Company was the apple of the Government's eye with the Bridgend contract. Now that company is the rotten apple in the Government's barrel because it has decided to try to manage the company's business in the long-term interests of the work force and the marketing of its products.
It was said that what was good for General Motors was good for the United States. I believe that what is good for Ford, ultimately, will be good for Britain.
Tragically, Government intervention is not confined to the top. It extends throughout British management. Yesterday the Secretary of State for Prices and Consumer Protection went to great pains to defend the Price Commission. He mentioned many matters with which the Commission had been involved. He explained the way in which it had held the price of dry batteries and tea.
Today I received a communication from a company that runs a distribution business in the North-East of England. It received information from the Food Trade Employers' Wages Council. On an open postcard that company was told that it must pay employees who were over the age of 21 an additional £7·40 a week —a 22 per cent. increase in earnings.
That is reasonable, since those workers are on a low base rate of £33·90. It should be corrected. But one can imagine the consequences. Undoubtedly one will be price increases of between 5 per cent. and 7 per cent.
Is that admissible? Will the Price Commission allow it? In many instances, the Price Commission has refused to operate in that way. The Commission is a huge distortion. The Government have allowed it to develop, not as a major part of their anti-inflationary Package, despite the protestations of the Secretary of State yesterday. He was the first to admit that its contribution to keeping the retail price index low was about 0·5 per cent. in a year. That is not what is important. What is important is the breadth and scale of intervention.
If we really want to get cracking with the management of our economy, we must reduce non-productive time. We must make more time available for that which really matters. We must make decisions. We do not want more consultations or more factors to be considered. We must have more time and more opportunity to create more sales, more profit and more jobs. The Government give no encouragement. We must seek a Government that will encourage the reduction of non-productive time.

Mr. Deputy Speaker: I am obliged to the hon. Member for Pudsey (Mr. Shaw). He was well within the limits. If all hon. Members follow his example, we shall be able to add to the list of those who are anxious to take part in the debate.

6.43 p.m.

Mr. Eric S. Heifer: I shall begin my remarks by analysing one or two of the points made by the Leader of the Opposition. One could describe her speech today as her "gobbled" philosoply. I have never before heard in the House a sharper or quicker speech with such old-fashioned ideas. The Prime Minister wanted to know the Opposition's answers to our economic problems. He was right. We all want to know. I have been critical of the Prime Minister's views on incomes policy.
This is the $64,000 question. I listened with interest to hear what the hon. Lady would say. She said that if we curb private enterprise we cannot achieve advancement. That amounted to her philosophy—her policy. She said that if we allow private enterprise to rip and give it unbridled support in every way, the economic problems of the country will be solved. It does not work like that.
We have already had unbridled capitalism. Private enterprise was let rip during the 1930s, when there were enormous high levels of unemployment, with real poverty amongst working people. A former Prime Minister, Mr. Macmillan, wrote a book, "The Middle Way ". Even he accepted the Keynesian view that Government intervention in economic affairs is necessary to bring down unemployment, to control the economy and to ensure that there is an element of order and planning for the resources of the country.
The right hon. Lady rejects that entirely. Many of my hon. Friends and I have made it absolutely clear that we are opposed to the incomes policy of the Government, but we did not abstain from voting on the motion or the amendment tabled by the Conservative Party last night. The alternative to the Labour Government's policies, if we do not win the next General Election, are the so-called policies—or lack of policies—of the right hon. Lady. That is not acceptable. Last night's motion was hypocritical. The hon. Member for Chingford (Mr. Tebbit) is smiling. He was in this House when, from the Opposition Benches, we had to fight the Industrial Relations Act, which was brought in by a Conservative Government.
That Government were prepared to introduce measures that would curb and control the trade union movement. The

Conservatives will be happy to bring in legislation to control the trade union movement. It is all very well for them to say that they do not want curbs or sanctions. They proved by their actions in a Government of which the right hon. Lady was a prominent member that they would introduce such sanctions.
My hon. Friends were not prepared to support a hypocritical motion designed to ensnare us. We have been totally opposed to the 5 per cent. policy and the incomes policy put forward by the Government.

Mr. Tebbit: Will the hon. Member give way?

Mr. Heffer: No, I shall not give way. When I do give way I find that my speech becomes much longer.

Mr. Deputy Speaker: I agree with the hon. Gentleman.

Mr. Heffer: Recently I was interrupted about 10 times. I had to reply to each point. That added to the length of my speech, as has happened now, in my saying that I shall not give way. I apologise to the House for that.

Mr. Deputy Speaker: The hon. Gentleman's reply has been as long as the intervention would have been.

Mr. Heffer: I doubt that, Mr. Deputy Speaker. In any case, the hon. Member for Chingford (Mr. Tebbit) does not usually make very good interventions.
The Government's policy was clearly outlined in the manifesto of October 1974. Our criticism of that policy is that along the way it has become distorted. The manifesto said
 The Social Contract is no mere paper agreement approved by politicians and trade unions. It is not concerned solely or even primarily with wages. It covers the whole range of national policies.
And yet the social contract became identified with incomes policy. We did not have a statutory incomes policy, but we had legislation which, while not embodying the old type of statutory policy, contained a form of incomes policy. We have opposed that consistently.
I echo the words of my hon. Friend the Member for Poplar and Bethnal Green (Mr. Mikardo), who made a brilliant speech.

Mr. Ronald Bell: Tower Hamlets.

Mr. Heffer: I must be out of date. I mean my hon. Friend the Member for Tower Hamlets.

Mr. Robert Mellish: It is Bethnal Green.

Mr. Heffer: I took the advice of my right hon. Friend the Member for Bermondsey (Mr. Mellish), the former Government Chief Whip, so it is his fault.

Mr. Mellish: It is Bethnal Green and Bow, so the hon. and learned Member for Beaconsfield (Mr. Bell) is wrong.

Mr. Heffer: Whatever the constituency, I am referring to my hon. Friend who was speaking from behind me a few moments ago. He made a brilliant speech, and I echo his point.

Miss Joan Lestor: It is Tower Hamlets.

Mr. Heffer: Does it matter? It does not matter whether it is Tower Hamlets or Bethnal Green. His name is Ian Mikardo—

Mr. Deputy Speaker: Order. It is out of order to refer to an hon. Member by name. The hon. Member for Liverpool, Walton (Mr. Heller) must refer to an hon. Member's constituency.

Mr. Heffer: It is somewhere in the East End of London. I have been there on a couple of occasions.
I take issue with those Conservatives who sneered at my hon. Friend when he said that he would not vote for the Government again in such circumstances. I know from the lengthy debate and discussion that I had with him yesterday that, faced with that situation, nothing would induce my hon. Friend to go into the Government Lobby. He, like many of us, feels passionately about this issue.
I hope that we have seen the end of this policy. I am worried, because the emphasis has been on the private sector. That seemed to leave open the whole sphere of the public sector. I hope that we shall not witness conflict in the public sector. Is there to be conflict in the Health Service, in the electricity supply industry, and in the coal mines? One has only to list the industries concerned—they

include the railways—to envisage the damage that could be done to the economy if my right hon. Friends persist in the belief that they can stick rigidly by the 5 per cent. policy for the public sector.
Apart from mining and perhaps the electricity supply industry, most public sector employees are among the lowest paid workers in the country. I am not forgetting the farm workers, who are also low paid. I hope the Government will not stick to a rigid 5 per cent., but there seemed to be a hint that the Prime Minister intends to continue the battle in that way and apply sanctions on the public sector. I trust that that approach will be totally rejected.
The Labour Party and trade union conferences stated clearly that they wanted the 5 per cent. limit removed for both sectors. The manifesto dealt with this clearly. It said
 The unions in response 
—that is in response to the various social policies of the Government—
confirm how they will seek to exercise the newly restored right of free collective bargaining.
We have to face that fact. There must be free collective bargaining without Government interference in the public sector. I realise that that means that we may have to pay more for our public sector goods and services, but if the workers in those industries are to get a decent wage why should we not pay more in the form of higher taxes from those who can afford them? I am not against those who can afford it paying for the various services through higher tax.
The right hon. Member for Worcester (Mr. Walker) made what was, in contrast to the speech of the Leader of the Opposition, a brilliant and vigorous contribution. He said, however, that under this Government the Health Service, like other services, had suffered badly. I do not accept that, although I accept that there have been cuts. But who demanded those public expenditure cuts more than the Conservatives? Day in and day out, for week after week there were Tory demands for public expenditure cuts. When the cuts were made, and many Labour Members were not prepared to accept them, the Conservatives merely accused the


Government of playing at making cuts that were insufficient.
Why do they not come clean and make clear where they stand on these policy matters? The Evening Standard or the Evening News earlier this year carried a story about a document that had supposedly been stolen from Conservative Central Office at Smith Square. It outlined some of the Tory policies on public expenditure cuts, which in some cases were as high as 20 per cent. The chairman of the Tory Party denied that the document was his party's, but he said that there was a lot of good common sense in it. What was he talking about? He was referring to future public expenditure cuts under a future Tory Government. Therefore, I shall without hesitation support the Government in the Lobby tonight.
The Conservatives are as divided on incomes policy as we are. Some of them —notably the right hon. Member for Worcester and the right hon. Member for Sidcup (Mr. Heath) want an incomes policy, as some hon. Members on the Government Benches want an incomes policy. To talk about going to the country on this issue, as though there were a fundamental difference between the two parties, is absolute rubbish. There are people in both parties who argue much the same on incomes policy. My party is opposed to it. That is what is important. When I talk about the party, I mean the party conference and not the individuals in it.
I hope that the Government come through tonight. Their record, if one looks at what has been achieved on the basis of their manifesto, and given their minority position—despite the criticisms that I and many of my colleagues have had—gives them the right to continue until some time in the summer and have a General Election on a better basis.

7.1 p.m.

Mr. Graham Page: The first part of the speech of the hon. Member for Liverpool, Walton (Mr. Heifer) was devastatingly destructive of a main item of his Government's policy, in the same way as was the speech of his hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo). This is complete justification for voting against the motion

tonight. Those two hon. Members have shown in their speeches the division that exists on the Government side of the House over major matters of policy. The Government are not supported by their own party.
The hon. Member for Walton was careful to say that he was talking for his party and not for his Cabinet as he waved towards the Front Bench. We are put in an extraordinary position tonight when being asked to vote our confidence in Her Majesty's Government—which must surely mean our confidence in Her Majesty's Government's policy. The debate arises from the Government's having been defeated on a major item of their policy. They may have been defeated on the specific issue of sanctions, but one cannot divorce sanctions from the whole pay policy. Having been defeated, the Government ask the House for confidence in their policy, but the very first line of the Prime Minister's speech shows that he is abandoning the policy on which he was defeated yesterday. It may be quite right, quite constitutional and conventional that he should follow the feeling of the House. But what are we asked to vote on now? In what policy are we asked to have confidence? The Prime Minister said that the policy had been abandoned. He was very mysterious about what was to take its place. Yet we are asked tonight to show confidence in a policy about which we know nothing.
The motion asks us to express our confidence in Her Majesty's Government, while the facts seem to indicate that Her Majesty's Government have lost confidence in themselves. That lack of self-confidence set in as a result of the events leading up to the Lib-Lab pact. No Government with confidence in themselves could possibly have entered into that sort of arrangement with a minority party. However, the arrangement. to give it its due, did restore some confidence of the Government in themselves while the pact lasted, but it did not sufficiently restore that confidence, when the pact had faded away, to enable the Prime Minister to say" I will now go to the country ". He had not got enough confidence in himself, his party, his policy, or his supporters, either inside or outside the House, to face the country in a General Election.
Instead of an election this autumn, we returned to the House of Commons. The


lack of confidence of Her Majesty's Government in themselves during the few weeks of this Session has been pathetic. The Prime Minister might just as well have extended the Summer Recess to next Easter for all that this House has been called upon to do.
In the business that the Government have brought before the House there has been a lack of what I would call hard politics, the absence of fierce controversy. Only yesterday and today has the situation changed—and the Government would not have brought this issue before the House if we had not had the device of Supply Days—the continuous unbroken thin line which represents the one-line Whip. All this has reduced the House, in my view, to the status of a parish meeting. It is that degradation of the House by the Government in order to keep out of trouble that justifies us in saying tonight that the House has no confidence in the Government. That is one reason why the Government should go.
However, a vote of no confidence in the Government has some illogical results. If the House, by its vote tonight, says that it has no confidence in the Government, not only will the Government be dissolved; so will Parliament. There is the occasion when a new Government can emerge without a dissolution of Parliament, but that is hardly likely in the circumstances. Therefore, the House, by voting the Government out of office, votes itself out of office. By saying that we have confidence in ourselves—the House —and thereby defeating the Government, the House brings about its own demise.
A vote of no confidence in the Government, in answer to the motion that we are debating, is the equivalent of a vote of no confidence in the House as it is at present constituted. Although that is illogical, it may be the most appropriate result. The lack of confidence in the Government stems from, and is bound up with, the composition of the House as it is today. There are the minority parties, and there is the party within a party on the Government side of the House. I suppose that we shall have to live with the minority parties for a long time. We shall have to put up with what may be corridor bargaining in order to reach decisions in the House. But when the Government party itself is so divided,

as we have seen today, it is time for both Government and Parliament to go.
Let us examine the other part of the motion, in which we are asked to express confidence. It mentions the determination of the Government to strengthen the national economy. How? By the policies of the Front Bench or by the policies of the hon. Member for Bethnal Green and Bow and the hon. Member for Walton? The motion mentions the determination to control inflation. How? By which policy—the policy of the Government Benches below the Gangway, the policy of the Front Bench, or, perhaps, the policy of the Benches behind the Front Bench? The motion speaks of determination to reduce unemployment. Again, how? I do not want to he tediously repetitive, but in which policy are we to have confidence?
In whose policies would the House be expressing confidence if it accepted this motion tonight? We have reached a situation in which the Government cannot continue to govern. They can certainly try to govern, as they did on the sanctions issue. They can try to govern by administrative action alone. They can try to govern merely by acting as the Executive without coming to the House for approval of their policies or their actions. This is what they have tried to do over pay policy and the enforcement of their pay policy, without legislative consent of Parliament, without legislative consent even of subordinate legislation brought before Parliament.
That is another good reason why the Government, this Parliament and the Prime Minister should go— the resort by the Government to administrative action to the exclusion of parliamentary decision. Thank heavens we have in our parliamentary system the device of Supply Days. Otherwise, I do not know what would have happened to this Session of Parliament. This debate would never have been held. When Parliament has a controversial debate of this sort, it is at its best. We should have debated other matters of controversy between Opposition and Government.
It is evident that if the Government remain they will have to resort more and more to executive action, to the exclusion of Parliament. This is the point at


which the Government of a democracy such as ours should go.

7.11 p.m.

Mr. Robert Mellish: The right hon. Member for Crosby (Mr. Page) will, I think, be surprised to hear that I hope that there is an early General Election. I should not be unhappy if we lost this vote and Parliament were dissolved. It would certainly show that neither the Prime Minister nor the Government were running away but that the sovereign House of Commons had decreed that there should be an appeal to the country.
I do not intend to defend what appears to be the impossible. This Government are working under impossible conditions. Last night, by sovereign decision of Parliament, there was a tremendous encroachment on one of the Government's major policies—sanctions to enforce a 5 per cent. limit. That was eroded by Parliament, as it has the right to do, so I welcome a General Election.
I still have a great deal of faith in the intelligence and the wit of ordinary people. They will decide whether this Labour Government have done an honourable job in the past four years. They will have the balance sheet put to them through the media. I do not attack the media, because whatever else they have done—television in particular—they have made our people better informed.
I do not take much notice, however, of opinion polls. The 1970 Gallup Poll was enough for me. When a party was shown as 14 points ahead on the eve of polling day and then lost the election, that undermined my confidence for ever. I urge all hon. Members utterly to disregard opinion polls for the rubbish they are. The vast majority of people do not see Gallup Poll people anyway.
I believe, therefore, that there should be an election and that my party will be able to put forward a fair and honourable balance sheet.
I was appointed a member of the Cabinet in 1974, when I was also made Chief Whip. The fact that I did not want to be Chief Whip may have helped to put me in the Cabinet—as a sop. History will show whether that is true. I do not disclose Cabinet secrets when I say

that I was on a sub-committee in 1974 which dealt with a whole mass of wage claims from the public sector which had come in when what is called the "Heath policy" on wages was finished. We had no policy in that area and we had to settle those claims.
We were settling claims at 30 per cent. 32 per cent. and 35 per cent. Doctors, teachers, nurses—everybody, but everybody—asked for it and got it. That was the ideal outcome of what I gather from some of my hon. Friends is the real free collective bargaining argument. Inflation was running at about 18 per cent. and we were advised—correctly, without a doubt —that on that rate of expenditure, particularly on that front, inflation would rise to 35 per cent. in one year.
From that moment, this Government showed guts and courage. They were unpopular; they took rotten decisions; they did not have an easy time inside their own party or in the House. They showed courage which I believe the vast majority of the British people respect.
The Government came to an agreement with the trade union movement, which also comes in for a good deal of criticism. It is sneered at and jeered at and gets a bad press. One evil, dirty strike at one noble hospital gets a full blast of publicity until anyone would think that every trade unionist in the hospital world was on strike. That is so unfair. The vast majority of trade unionists are decent, intelligent and honourable citizens, as they demonstrated by the concordat that the movement had with this Government, when for three years there was a wage freeze or a wage agreement—call it what you will—without legislation.
The £6 policy did more for the lower paid worker than anything that I have known in the history of so-called collective bargaining. It will be for the people to decide, not hon. Members. We have our views, our political prejudices and our loyalty to our own Front Benches. But the people who will vote have to answer one simple question "Am I better off today than I was in 1974?" Let them answer that, bearing in mind what we have had to go through in the last four years.
That is what elections are about. With respect to my hon. Friend the Member


for Liverpool, Walton (Mr. Heffer), people do not read manifestos as deeply as he does. I have news for him: neither do I. I believe that this Government have governed fairly and honourably.
I was born into the trade union movement. My father was an 1899 dock worker. That may mean nothing to many hon. Members, but it was in that atmosphere that I was brought up. No one—on the Left or the Right of this party—can talk to me about trade unionism. I joined it when I was 15—and not to become a union official, either. Funnily enough, I joined the Labour Party at the same age—and I did not join it to become an MP, like some I could name.
I have been in the trade union movement all my life and I understand what it is about. In the Past three or four years, trade unionists have shown a patriotism the like of which I never thought even they were capable of. It is all right to sneer and jeer, but the public and many firms understand this. I have never been opposed to private profit. After all, this is a mixed economy and private profit is essential. What people do with profit is the all-important matter. The private sector could not be expected to show the patriotism of the trade union movement.
I deeply regret that that concordat with the trade union movement was not renewed. I read the news of that vote with regret, because I knew that from that would stem so much trouble and so many heartaches and that they would overflow in my own party.
No Government can legislate to control wages: it is not possible. I should have thought that we had learned that lesson, anyway. It can be done only by agreement and understanding. It is not possible to devise legislation which will stick. We have enough legislation today as it is. If everybody abided by the legislation we have, we should be living in Utopia. We do not want legislation—my God, we have enough of it. If it all worked, nobody would beat his wife, nobody would steal or rob, and everybody would be well behaved. There are laws for all of that.
The important thing is not the law but a change of heart. How do we achieve a change of heart by ordinary people? I thought that I had seen

some understanding of this in the past two or three years. I mean no disrespect to anyone when I say that I do not mix with people in the West End and places such as that. Londoners do not go to the West End: they leave that to the Scots and the tourists. I stay in my suburb among my own people. I know what they say. Although they concede the point so often made by some of my hon. Friends, among them my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), that while of course it is true that wages and wage increases are not the be all and end all of inflation—and of course that is not so—certainly it is part of the problem ; and no one, including my hon. Friend, can deny that from 1974 onwards the control that was exercised by the trade union movement in relation to wage explosions at that time contributed to the fact that our inflation rate is now down to about 8 per cent. Most people in Britain understand that, because, if I understand the present situation, it is the view of some of my hon. Friends—I am not sure what the Conservative view is; I must be forgiven for saying that I have not a clue as to what they are talking about, but that is not unusual with the Conservative Party; I do not know what its policy is—that somehow if we let wages rip all will be well because that is not inflationary. I am not prepared to agree with that.

Mr. Mikardo: I did not say that.

Mr. Mellish: With great respect to my hon. Friend, then I do not understand what people are saying, because those who are against that policy of Government control must surely be in favour of what is called free collective bargaining and the strongest get the most.

Mr. Mikardo: With the greatest respect to my right hon. Friend—and he knows that I do not use the term "friend" conventionally—he cannot possibly have read anything I have ever said or written. We have not said that we are against control of wages. We have said that, if there are to be controls—and if we are to control the whole of the economy—wages, too, can be controlled. What cannot be done is have a planned wages sector and an otherwise unplanned economy.

Mr. Mellish: My hon. Friend is going to get very excited because I now move a long way towards his argument, in the sense that I accept that if we are to talk in terms of wages being planned there should be much stricter control over prices. People who think for themselves outside, in the back streets, do not understand how it is that rail fares can go up astronomically by perhaps 10 per cent., 12 per cent. or 14 per cent., and bus fares and other things go up astronomically and yet we talk in terms of wage rises of only 5 per cent. That is a very fair point. Unless the Government show that they are determined to deal with the prices front also, they cannot be expected to have too much success on the wages front.
I understand that the Tory Party does not believe in controls of any prices at all and would let the whole thing rip. That must surely be part of its statement when it goes to the nation—if we lose this vote tonight. The Tories must say" We believe that prices and wages should be uncontrolled" except, I suppose, they will say that that will not apply in certain areas of the public sector "Where we think we might be able to kick them around and stop them from getting more." The Tory Party says" We believe in cuts in public expenditure but not in cuts in defence." That is an extraordinary argument. I say to this House tonight that one thing is certain. I believe that the average Briton recognises today that, whatever happens in the future of our nation, Governments have to intervene. The idea that we could go back to the past when there was no Government interference, when Governments stood aside and let the trade unions and private enterprise and the whole machinery of what is called the free enterprise system work itself out, has gone for ever.
Governments must more and more intervene. For proof of that, hon. Members should go abroad and see how Governments intervene even to get export orders abroad by sending Government teams with private enterprise representatives, Government funds and the rest to get the orders. That is true and every Conservative here knows it to be true, and we cannot get out of that race, so the Government have to intervene. I

believe we have a balance sheet of which this Government have every right to be proud. They should not be at all unhappy tonight if we lose, and I have sufficient confidence in the British people, despite the fact that the Election would be fought on a lousy, out-of-date register. I have every confidence that the British people would support this Government who have shown that they have not only the guts but also the policies.

7.26 p.m.

Mr. Peter Emery: I shall be as short as possible and try to limit my remarks to five minutes. May I make quite clear that I am always delighted to follow the right hon. Member for Bermondsey (Mr. Mellish). Nobody speaks with greater honesty or greater directness and I believe that he has voiced much of what I shall not be criticising in my speech when he says that it is right and proper that this Government should be ready to go to the people; because it is my judgment, following on from what he has said, that the real problem we are faced with in the House tonight is that of a Government hanging on to power purely for the sake of power itself. This Government are staying in office although they are entirely discredited. There is nothing they can do constructively from now on during this period of office. This Government have been defeated on a major plank of their economic policy. These are not my words but the words of members of the Cabinet, spoken over and over again—that sanctions have to be maintained as a major plank of economic policy.
If that is swept away, there is little this Government can turn to as an alternative, because they have refused to do so in the past and have resisted all the blandishments of the Left wing of their own party who have wanted to see this alteration in policy. They can carry forward no other major piece of legislation. There is not one major item in the suggested Labour Party manifesto of its conference of 1976 that this Government could dare bring to the Floor of the House as a Bill with any possible thought that it could be got through this Parliament at present. We are a hung Parliament. We might well be described, in American terms after the presidential election, as a "lame duck" Government,


except that this is not a lame duck Government but a dead duck Government, as the Leader of the House is a dead duck.

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot) rose—

Mr. Emery: I will give way, but 1 have been asked to speak for only five minutes. I will try to do so because those on the right hon. Gentleman's side have spoken for over 90 minutes while those on this side, the same number of speakers, have spoken for only about 40 minutes.
When we have a dead duck Government we are faced with a major constitutional problem, and it is that one point which I want to try to hammer home tonight. I believe that the difficulty facing the House is that this present minority Labour Government have changed and are changing the constitutional rules about staying in office. I have had two sources trying to check on this point since last night. I do not believe there is any Prime Minister—I do not believe the Minister who winds up this debate tonight can quote me any example of any Prime Minister of any Government who has done so—who has actually opted to stay in power when that Government have had the whole of their economic policy knocked from underneath them. This Government are just hanging on for the sake, as I have suggested, of staying in power. This is the damage. It is here.
Any other Government having suffered a defeat such as this Government suffered last night—I admit that it was not classed as a vote of confidence, although there have been many other times when Governments have been defeated—would have resigned. As the Chief Whip will know, this aspect of confidence is something quite new, and used never to come in. The confidence lay in whether the Government could get their policy accepted by the House and it was shown here last night that this could not be the case. So what have we? It seems to me that at any time when the Government are defeated on any issue, until next October, they have only to come back here and put down a confidence motion to try to unite their own Harty—and let us be frank, the chances of their not doing so

are pretty slight. So this Government march on doing absolutely nothing.

Mr. Mellish: The hon. Gentleman should be fair. If they did not do that and then resigned, what would be said by him and his hon. Friends when they resigned—that they were running away?

Mr. Emery: That is not what I am suggesting. I suggest that if the Government win the vote tonight, they should go to the people immediately.
We have seldom seen a Government maintained by such a disparate force. There are many different views being forced into the Lobby tonight to sustain the present Government. It is being done, not to sustain a policy or a programme or even to sustain what was laid down in the election, but because the Government are seeking to sustain themselves in power for the sake of power itself. If the Government have reached that position, I believe that they are vastly undermining the democratic structure of this Parliament.
If the Prime Minister is convinced that he has the confidence of the people, as lie so glibly and loudly states, why does he not put it to the test? Let us prove that that statement is bravado. Let us prove what the British people want. I believe that they want a change of Government, but I am convinced that they want the opportunity to choose. Therefore, this House tonight should decide that there will be an election as soon as possible.

7.31 p.m.

Mr. William Hamilton: Shortly after the party conferences in October, Kenneth Fleet, editor ofThe Sunday Times Business News, wrote an article that is extremely relevant to this debate and has not been touched on up to now. Mr. Fleet quoted a letter that appeared inThe Timesin the name of Sir John Partridge. Let me quote the relevant part of that letter, with which I so much agree:
 Since the end of 1973 industrial earnings have risen by 106 per cent., prices by 101 per cent., gross domestic product by 4 per cent. Within gross domestic product industrial production has risen by 1½ per cent., and manufacturing production has fallen by 4 per cent. There are three elements in the equation: pay, prices and output. It is the last of these which points most directly to the magnitude of our problems.


I very much agree with that comment. Sir John went on to say something else with which I agree:
 a nation or a business which pays itself vastly more for a relatively static volume of production is playing ducks and drakes with its future.
I say "Amen" to that.
The performance of the Leader of the Opposition this afternoon was a flop; it cannot be otherwise described. It comprised a bunch of meaningless platitudes, which got us nowhere. It is easy to criticise the Government, as I have myself, but when we seek a possible alternative and a better policy we are left waiting in vain for any positive response from anywhere in the House or outside it.
The right hon. and learned Member for Surrey, East (Sir G. Howe) said yesterday that the Tory answer to the prices and incomes policy was contained in "The Right Approach to the Economy ", a Tory policy statement document. What does that document say? I think it says —I am not being unkind—that there is something to be said for an incomes policy, but that it does not seem to work for long. That is the dilemma in which Tory and Labour Governments have found themselves over the years.
The right hon. Lady the Leader of the Opposition frequently talks about these matters outside the House. Early this year she spoke to Scottish people and said:
 We all want to see Government withdrawal from interference in prices and profits.
In other words, industrialists want complete freedom to put up prices as they see fit and to pay out and earn profits as they see fit. She went on to say:
 We also want non-governmental interference with wage bargaining.
In other words, she wants to give complete freedom to industrialists on one side to obtain maximised profits and prices and on the other hand she wants to see the trade unions battling it out with the industrialists by seeking maximum wages for their union members.
It is curious how on these matters the views of the right hon. Lady and those of the Left wing of the Labour Party—or the self-styled Left wing of the Labour Party—seem to coincide. They both argue for a free-for-all. Mr. Moss Evans has been specific about it. The principle

seems to be applied with no regard for social justice, with scant respect for the national interest, and with no interest in the welfare of the neediest or the weakest. It is a matter of believing that brute bargaining strength on either side will give the biggest prizes.
However, that will be the case only in the short term. Short-term gains undoubtedly can be made by sections of the community—whether they be business men or trade unionists—making threats of one kind or another by the use of powerful bargaining muscle. But the long-term consequences in the pursuit of short-term sectional interests will lead to national impoverishment, in which the greatest suffering will be endured by those whom the Labour Party was created to protect. Let me say to my so-called Left-wing colleagues that in my view such a policy does not have the remotest link with Socialist principles. On the contrary, it is the very antithesis of all that we presume to stand for.
I wish to quote from a New Statesman pamphlet issued in January 1950 in the name of the Keep Left group of the Labour Party. My hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) said that at that time he was associated with the Prime Minister. He said that the Prime Minister had moved his ground since then. I consider that they have both moved their ground. I quote from that pamphlet, which was signed by my hon. Friend and also by my right hon. Friend the Member for Blackburn (Mrs. Castle). This is what it said about wage fixing:
 Economic planning in a democratic Socialist economy cannot operate successfully if wage bargaining is left either to the arbitrary decision of a wage stop or to the accidents of uncoordinated sectional bargaining.
It went on:
 There must be the recognition by the trade union movement that wages in any industry are no longer the business only of the employers and the workers in that industry but of the whole nation.
It later said:
 We need a strong lead from Downing Street.
Nothing could be plainer than that.
We in the Socialist Party have always argued that we believe in a planned economy, but we must plan the whole economy and not part of it. When people


talk of more rigid control of prices, they must remember that the price of labour is wages. So we must include the price of labour in price controls. That is what the Government have been doing. Nobody can complain about or criticise the present Government or the Prime Minister on the grounds of weak leadership. They might argue whether he is right or wrong but over the years in this House I have watched seven Prime Ministers trying to grapple with these self-same problems. None of them, in my experience, has been more honest and more forthright than the present Prime Minister in putting the facts fairly and brutally before the House and before our people.
We must all face the fact that the most difficult exercise in a democratic society is to persuade the generality of our people to forgo present short-term gains for the sake of long-term benefits. It was Nye Bevan who put that in its context when he said that to forgo satisfactions now would be to the benefit of our children and our children's children in 20 or 25 years, but that to advocate such a policy would be going the right way about losing an election. This is one of the dilemmas of our democratic society. Our people realise this and now know what difficulties we face in the context of an international crisis that cannot be brushed aside as if it were irrelevant.
I am not saying that I am indifferent to the result of the vote tonight. If it goes against the Government the problems will remain. The people know that, and they also know that the Tories have absolutely no valid or credible alternative to offer. Time and time again they have been asked by the Government to state their alternatives and they have steadily refused to do so, for their own very good reasons. [HON. MEMBERS: "What about an election? "] Hon. Members ask why we should not have an election. I shall tell them. If we look at the record of the Government over the past four years in the context of the deep international economic crisis, if we examine the yardsticks—particularly on inflation—and if we remember that people in Europe speak of the very impressive record of this Government in reducing the rate of inflation from the 20 per cent. to 25 per cent. of a few years ago to a quarter of that figure,

we realise why we should not have an election.
The difficult problem of unemployment in Western European countries is also discussed and is seen to be coming down. Whatever yardstick, under social justice, by which we judge the achievement of the Government—whether we talk about the disabled, old people, or whatever—the spirit is there, even though we may not be doing enough.
All the indications are that the clock will be turned back in many of these directions if there were an alternative Government. So, although the Government might have sustained a temporary setback over sanctions, I hope that very soon they will spell out the fiscal and other measures that they will adopt in the light of the decision that the House took last night. Certainly, no national purpose will be served by having a General Election in the next few months. I hope, therefore, that the Government will be enabled by tonight's vote to soldier on with their policies, as amended in the light of the vote last night, of social justice and fair play to everybody.
I would also like the Government to think about the setting up of a new Ministry for productivity, because there lies the clue to what we need to do in so many directions. We can talk about redistributing the national cake. Our basic problem is to increase the size of the national cake. If we can do that we shall be on the high road to success as a nation.

7.43 p.m.

Mr. Robert Rhodes James: I am in full agreement with remarks of the hon. Member for Fife, Central (Mr. Hamilton) at the end of his speech and I also find myself in agreement with the right hon. Member for Bermondsey (Mr. Mellish). The one feature that has struck me since I became a Member is the reluctance of hon. Members, particularly Ministers, members of this Government and of former Governments, to admit that mistakes have been made by successive Governments over the past 15 or 20 years.
These have mostly been honest mistakes, and our task surely is to learn from our own mistakes and those of others rather than constantly to go back over periods such as the 'thirties, or even


the First World War, to cast blame and by debating the past begin to lose the future. If we start from that premise, when we examine this debate and this motion we ask whether we have confidence in any Govenment. In short, should we not be asking whether this country is governable. Do we have a future as a nation, and are the established institutions of government, Parliament and the trade unions relevant to the situation that we face? We should not be discussing percentages and sanctions and the conduct of Ministers. We should be debating how we—I emphasise the word "we"—to whatever political party we belong, are to emerge from the condition so aptly described by the late Lord Nuffield when he said that we were a nation in semiretirement.
These are the fundamentals which lie far deeper and far beyond the issue that we are talking about today. We recognise that the gulf between the political parties has grown steadily wider since the war. I am one of those who regret this, though I do not cast blame. However, this has led to a series of lurches by successive Governments, which have shaken public confidence in our institutions and in our future as a nation. If it is supposed to be unforgiveable to speak in support of moderation and national unity, I can be charged with that, because I believe in these things. I believe that there is such a thing as consensus politics, and I believe that these are public virtues. None of us, institutions or individuals, has the prerogative of being right.
I do not wish to enter into a detailed examination of the Government's proposals or the events of yesterday. My dominant concern is for the future of this nation and its safety in a bitterly hostile and dangerous world. I am concerned for its economic prosperity and its standards. For that reason I agree with many of the points made by the hon. Member for Fife, Central and the right hon. Member for Bermondsey when they spoke of social justice.
My quarrel with the Government lies not so much with their policies, although I do have some disagreements about them, as with the emphasis on division. I disagree with the increasing use of what I regard as cynical opportunism and a mounting disdain for the individual.

These things seem to be quite alien to the old Labour Party—the party of protest. Perhaps in the process of becoming the party of government the Labour Party has lost many of its former virtues, which hitherto commanded the respect of even those most strongly opposed to it as a party. When I look at the condition of the Labour Party now I am reminded of the words of Johnathan Swift—I have included them specially for the right hon. Gentleman the Leader of the House—who wrote that
 Party is the madness of many for the gain of a few ".
I say that the politics of envy and of division have no place in our future and I would hope that when this Government come to an end we shall return to the politics of incentives and of realism—to the politics of common sense. I hope that we shall return to a Government and to a Parliament genuinely dedicated to the resurrection of our nation by our faith in our fellow citizens and their right to chart their own destinies. [Interruption] Does the right hon. Member for Down, South (Mr. Powell) wish to intervene?

Mr. J. Enoch Powell: I did not intend my sotto voce remarks to be heard, but as they were I must tell the hon. Gentleman that in the Conservative Party one is not allowed to talk about a nation. That is an old-fashioned idea. We are to become a province in the European State.

Mr. Rhodes James: The right hon. Gentleman has not been in the Conservative Party for some time. I can assure him that we are still dedicated not only to one nation but to the concept of the preservation of that nation. The basis of my opposition tonight has not so much to do with individual policy as with the lack of morality that has characterised this Government's period of office.

7.50 p.m.

Mr. Alexander W. Lyon: The right hon. Member for Crosby (Mr. Page) suggested that a vote to bring down the Government must inevitably mean a vote to end this Parliament. That is true only in theory. Clearly, it would be possible for the Queen to send for the leader of one of the minority parties to form a Government. But that is not true in practice. If the Government had gone


last night, how would any other party in this House have been able to deal with the central issue facing us?
The truth is that we could have lost a vote of confidence at any time in the past two years since we lost an overall majority as a result of the inevitable toll of by-elections. We have been able to proceed with two years of industrious work because all the minority parties, other than the Conservative Party, have been so suspicious of a future under the Conservatives that they have not wished to unite to bring down the Government. I hope that that message will be heard loud and clear by the electorate. If there were to be an adverse vote tonight, saying that the House has no confidence in this Government, it would, equally, be clear that the minority parties have no real confidence in the Opposition either, and for good reason.
The central theme of our debate, today and yesterday, is what the Government of the day ought to do to deal with the problem of income inflation. Over the years some consensus has developed on the Opposition Benches, shared to some extent on the Labour Benches, to the effect that it is impossible to deal with this problem by any method of incomes policy. One would be impressed by such a growing consensus if it were the first time that it had happened. This is not the first time round. I remember, as did my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant), the situation which obtained in the first major attempt at incomes policy in the late 1960s. I also remember what happened in 1969 when we abandoned such a policy. I remember coming to the House on that occasion, admitting that throughout the whole of the policy I had supported it, and saying that I regretted its passing but that I thought it was inevtable that it would pass. I said that I did not think that we should see its like again.
It may be right that we never actually saw a statutory incomes policy again. But we very soon saw an incomes policy, even though the Government of the day were elected in 1970 on a programme which included a pledge that they would not operate an incomes policy. Within a short time they had such a policy. They were fighting for it tooth and nail until they had to bite the dust in 1974 because of the opposition of the unions to that in

comes policy. The Labour Government then came into power amid a consensus that there could not be an incomes policy, that, in the words of my hon. Friend the Member for Stoke-on-Trent, Central, it did not matter about an incomes policy because, after all, things were decided by the market and, in the end, the rise in incomes would be the same, with or without an incomes policy.
Nevertheless, within 12 months the experience of the market was enough to show that we needed an incomes policy. Now there is this increasing consensus on both sides of the House that we can abandon an incomes policy and return to the state of the market. I dare say, even before we have the election, whatever the circumstances of that election and on whatever platform it is fought by the Conservative Party, if it was then to come into power accepting that there would be no incomes policy and saying that we would organise the market by monetary policy, within a few months— perhaps as long as 12 months—we would be back here again with another type of incomes policy. If that is what we must look to, we must ask ourselves why it is that successive Governments have been driven to that irresistible conclusion. It must surely be that, whatever the difficulties of operating an incomes policy, such a policy, of some kind, is inevitable. It is inevitable, at any rate for the public sector because within that sector the Government are either the employer or the final arbiter of how much money the employer has to be able to pay for an increase in incomes.
Within the public sector at least the Government must have a view. When people use that neutral phrase, what they mean is that the Government must have an incomes policy, some view on how much in any given year, in any given economic circumstance, they can allow for the increase in the public sector. I can imagine that the Conservatives might well operate a policy for the public sector—as they did in 1970–73—which was extremely discriminatory against those in that sector and extremely discriminatory against the pricing policy of the nationalised industries. I can also imagine that a Conservative Government might attempt to operate a wholly different type of policy for the private sector. I cannot understand how anyone on the Labour


Benches can believe that it is possible fairly to operate that kind of policy.
In 1973 the Conservatives showed that it was not possible for any length of time to operate such a discriminatory policy because the tensions within the public sector were such that they ultimately broke down the barriers. It was shown that either there has to be fairness for all, with the private sector taking its measure of restraint, or else the public sector says that it will not stand for such a policy. There is now sufficient muscle within the unions in the crucial areas of the public sector for that message to make itself felt.
In those circumstances it seems that the arguments yesterday and today—while they may be all very well within the context of a dying Parliament—are totally irrelevant to the future and to the question which the electorate will have to answer in due course. The electorate will have to say what is to happen with incomes in the immediate future. The major reason why this motion ought to succeed is that, if the Government were to lose the motion, we should be launched into the chaos of an unorganised General Election. That election could not take place for at least two months. There would be a period between now and then during which a number of major claims would have to be settled by some type of co-ordinated policy. The most important is the NUPE claim.
The NUPE claim has to be settled by some Government, even an interim Government. It has to be done now, as a result of the arguments about sanctions, by consent. Who is best able to tide us over such a difficult period? In my view, it must be the Prime Minister and the Government, because they are most able to form a new concordat with the unions. I hope that the result of the events of last night will not mean that there will be a defeat tonight, but that instead there will be a further opening of negotiations, a deepening of the discussions which took place a couple of months ago, which will produce a new concordat to deal with this problem.

7.58 p.m.

Mr. Ronald Bell: The motion on the Order Paper asks the

House to express its confidence in Her Majesty's Government. It does not ask the House to express its confidence in Her Majesty's Opposition, which is what we seem to have had a good deal of discussion about today. I propose to address myself to the motion. The motion affirms the Government's determination to do various obviously worthy things, such as getting rid of inflation, unemployment, and so on. It does not express any method by which this will be achieved. What concerns the House and the country is not the Prime Minister's determination but what it is that he, his Government and his party want to do.
It has been a most interesting debate. It has shown explicitly the way in which the Labour Party has lost its way, has become disillusioned with Socialism and has found no other theme. That is an excellent reason for it now being turned out to grass and for an opportunity to be given to more purposeful guidance of the country's destiny.
When the legislation for the Monopolies and Mergers Commission was introduced in the 1945–50 Parliament it regulated employers but did not regulate or control in any way the activities of labour—trade unions. That was justified by the Minister who introduced that legislation. He said that labour was different in kind from the products of labour. He argued that it was all right to control employers but wrong in principle to control labour. Mr. R. A. Butler, who spoke for the Conservative Party on that occasion, agreed with that theme. He said that labour was totally different and that it would be wrong ever to seek to control it. That is the way in which we started after the war, and that is the root of our present troubles.
It is incredible, almost unbelievable, that for the first six years after the war, in a time of total shortage and rationing of everything, Bank Rate was held at 2 per cent. without a day's break. That was called oiling the economy with cheap money. The result was that we started the process of bidding up the price of labour without any corresponding increase in production. Hon. Members from both sides of the Chamber have given the figures. The hon. Member for Fife, Central (Mr. Hamilton) was the last to do so. The figures epitomise succinctly the result of the process as it has emerged in our immediate times—for instance, the past four


years. It has been a period of rising money incomes and virtually stagnant production.
That is the problem that we face and we ask for the Government's solution. The Labour Party rejected from the start after the war the market control of labour. They said that in principle it was wrong and they tried other systems. I suppose that in effect they tried nothing. They began to have doubts, and the Leader of the House will remember the occasion when the Labour Government decided that the process could not continue any longer. They said that we must have a market in labour and that it must be a fair market. They produced a White Paper entitled "In Place of Strife ". What is more, they prepared a Bill based upon it. Further, they introduced that Bill.
The Bill was read a First time and printed. Thereafter the present Prime Minister and his right hon. and hon. Friends wrecked it. After an inglorious period of some weeks, it was withdrawn without a Second Reading. They abandoned again the attempt to have a market in labour. If we have no market in labour on the specious argument that it is totally different from all other human concepts, activities and products, we must have something else. The only other system is control. However, the Labour Party does not like that either.
We have heard speech after speech from Labour Members denouncing the concept of the specific control of labour. Over the past few years the Government have been sliding along on an unofficial compromise. There have been guidelines and unofficial sanctions. Today at about four o'clock the Prime Minister said that in obedience to the decision of the House last night the unofficial sanctions would be dropped.
If we are considering whether we should have a new Parliament, is it not relevant to ask ourselves what is left? There is no free market because we cannot have a free market in labour unless we diminish some of the immunities of the trade unions. We have heard that said repeatedly, even from the Labour Benches. The hon. Member for Fife, Central said that the trade unions have too much muscle to enable such a system to work. That is the system of free collective bargaining. The hon. Gentleman is right. Therefore, we must reduce the muscle and

the immunities. That means repealing the Trade Union and Labour Relations Act 1974, and much else. That must be done to create a balance in the constitution.
The Labour Party will not touch that, but on the other hand it will not accept control by legislation of the processes of remuneration. That is absolutely right. That would not work. It is not necessary to look too far back. We have had statutes of labourers for 400 years. They have never worked. We do not want to start on a new history of statutes of labourers.
The Labour Party faces a stark dilemma, neither horn of which it is willing to touch. That being so, the only course is for the Government to go to the country and let someone take over who has some thoughts on these subjects. It is not the Oposition that is on trial today. It is not the Opposition's job to provide detailed proposals. However, we have a theme to offer to the country, whereas the Labour Party has lost its theme and has lost its way. It is not as though the public disagree with the Government or Socialism. The public have lost interest in Socialism. It used to be the 'ism that people talked about, but nobody talks about it now. I suppose that it has been tried. That is the trouble. It has been tried, so it is finished.
The Opposition believe in the free society. We believe that in a mature democracy such as ours it would be possible to have a market in labour that avoided the excesses and the admitted evils of a part of the nineteenth century. We believe that it would be possible to have a system that removed Governments from the fixing of remuneration. We shall never get any sense while Governments fix remuneration. The present policy is the perfect example of that. The policy is 5 per cent. for those who cannot avoid it. However, there are so many who can avoid it that the policy is meaningless.
The national newspapers are an example. We have never seen so many editors on each newspaper. There is the editor, the political editor, the sports editor, the City editor and the woman's page editor. One has only to reclassify a job to break through the Government's guidelines. That can be done without any effort. We all know that companies may


have an infinite number of directors. When jobs are reclassified the 5 per cent. policy means nothing. It is only those such as Members of Parliament who cannot be reclassified who become caught by such policies.
The Government's policy is bankrupt and useless and it is now time for the Government to recognise that fact and accept defeat tonight. I think that the right hon. Member for Bermondsey (Mr. Mellish) was willing to help with a little encouragement. If that comes about, we shall have a General Election, get rid of a Government who have nothing to tell the people and install a Conservative Government with a new, fresh and interesting approach to these temporary problems of our time.

8.10 p.m.

Mr. Eric Ogden: The debate has inevitably emphasised the differences between the two sides of the House. Yet hon. Members may agree that this Chamber can be a very strange place. Last Friday I came here prepared to make a massive contribution on the subject of the needs of the outer urban areas and the debate was cancelled. When the House debated the Consolidated Fund Bill this week, I waited 15 hours, hoping to be called, and was silenced by my own Government's guillotine. Tonight I came in only to listen and have been able to join in the debate almost at once and at will.
Yesterday we had the debate on sanctions. From time to time the House gives an importance to words that the words do not deserve. The question of "the arbitrary use of sanctions," which we had debated over many days in the past weeks, seems to me to be quite simple. The Government, as a purchaser, came to a supplier and offered advice. That supplier, who happened to be Ford, would not or could not accept the advice. The Government then proposed to take their custom elsewhere. I should be in exactly the same situation were I to go to a commercial company, say, Sainsbury. I may say "I hope that you will do this ". The company may say that it cannot or will not do what I ask, and so I am free to take my custom elsewhere, to Budgen, Tesco, the Co-op or anywhere else. It is exactly the sort of situation which we

have with "sanctions," but a situation which does not deserve the use of the term "sanctions."
Too often, trade unions—whether it be my own union, the National Union of Mineworkers, or others — concentrate almost exclusively on wages, as though that were the most important or only factor in which they are interested. Wages seem sometimes to become the be-all and end-all of a union's activity, whereas in my opinion the questions of wages, investments and profits are all bound up together.
It would be no use if my own union, for example, received such a large award as a result of a wage claim that inevitably three, four or six collieries had to be closed. It is no use in each and every coalfield having higher wages today if that means unemployment tomorrow. I hope that we can at least change that part of the picture, as my Government have been trying to do in many instances, so that the argument about what shall be received each day can become an argument about how much an industry can afford to pay. When we have a planning agreement for the coal industry, a national bargain between the Coal Board, the NUM and the Government which takes account of investment, productivity, and wages, we are in a different ball game altogether.
As the hon. and learned Member for Beaconsfield (Mr. Bell) said, this is a debate on confidence in the Government. If I speak from my knowledge of the opinions of the people of Merseyside, I can say that from Merseyside there would be a massive vote of confidence in the Government.

Mrs. Elaine Kellett-Bowman: The hon. Gentleman must be joking.

Mr. Ogden: No, I say this in spite of the unemployment on Merseyside. The position is clearly understood by the people on Merseyside. It is Government support for the private sector that is keeping a major part of the private sector viable on Merseyside.

Mrs. Kellett-Bowman: Mrs. Kellett-Bowman rose—

Mr. Ogden: I shall give way to the hon. Lady in a moment. If it were not for the massive aid being poured in by


day and by night to Merseyside, more and more private companies would be leaving Merseyside. Certainly we have problems, but they would be far worse if it were not for the aid being provided by the Labour Government. Merseyside Members are the nearest thing in that part of the world to the Hare Krishna people of London. Perhaps we are not quite so happy, because we do not go around with bells. We are continually asking for aid for the area, whether it is for the public or the private sector. There was to be a £78 million investment in Ford at Halewood in the latest Ford investment programme. There has also been similar Government aid for investment in GEC in Liverpool. My view about the sanctions on Ford is that perhaps the Ford management and the unions in Ford deserve each other. It is the weakness of the management that when they said "No" they meant "Maybe ", and when they say "Maybe" no one knows what they mean.

Mrs. Kellett-Bowman: Will not the hon. Gentleman agree that the North-West gets the worst possible deal from the Government? Our unemployment throughout the North-West is extremely serious, but a great deal of the aid is biased towards other areas, such as Scotland, Wales and the North-East. From the regional fund of the EEC the Government have directed six times as much aid to every unemployed person in the North-East as to the North-West. Does the hon. Gentleman really believe that the North-West will therefore put its confidence in this Government?

Mr. Ogden: I am not a betting man. If I were, I should certainly put my money on the electors of the North-West showing confidence in the Labour Government. They have done so consistently in the past. If the hon. Lady is really claiming that the North-West is neglected or disadvantaged, I can only refer her to a speech made by my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) in the debate on the situation of Plessey telecommunications. That debate affected the North-East and the North-West. It certainly affected Lancaster, Liverpool, Preston, Accrington and many other places. In that debate my hon. Friend said that the complaint against Labour Members in the North-East was that the Merseyside Members

and the Members in the North-West are getting much more help from the Government for industry than the Members in the North-East are getting. Indeed, my hon. Friend the Member for Burnley (Mr. Jones) complains that Merseyside gets a great deal more help than North-East Lancashire.
I claim that when all the Government aid for various areas is considered, we have more than a fair share of help in the North-West, and that includes Lancaster.

Mrs. Kellett-Bowman: No, it does not.

Mr. Ogden: The people will decide. when the time comes.

Mrs. Kellett-Bowman: They will.

Mr. Ogden: Government money and taxpayers' money pours into Merseyside like a torrent. Other areas think that we are the golden hand to which Government money comes along all the time. Certainly, if it were not for Government aid, our unemployment, bad as it is, would be a great deal worse. Our record in housing management on Merseyside is bad. We are about the worst managed housing authority in the business, whether the council is Labour-controlled. Conservative-controlled or Liberal-controlled. We are continually asking the Government to provide money for homes on Merseyside, homes our own local authorities are not prepared to provide.
The Secretary of State for Employment came to Merseyside three weeks ago bringing £2·8 million in his pocket to provide money for the district council in Liverpool, to help get rid of the 40,000 repairs which are waiting to be done in the city. The Liverpool city council is £10 million underspent in its housing account, and it has taken the Government's job creation programme to get rid of part of the backlog of work.
In the matter of homes, jobs, education, hospitals and social care, there would be a vote of confidence on Merseyside in the Government.
It has been said that the people should be allowed to say "Yes" or "No" now and to make up their minds. The suggestion has been made that perhaps we have not a policy, or that we have been too Socialist or not Socialist enough, but


whenever the General Election comes, whether it is next month, in two months or three months—certainly some time before October 1979—I am sure that the result will be reasonably close. The old days when there were majorities of 50 or 100 have gone by. I should like to see my party in Government with a sufficient enough majority to be effective and small enough for it to be influenced. That will be the position next time. We have not a system of proportional representation but in reality we have almost come to that.
When the time comes for the people to make their choice, I hope that my party will not pretend that things are going to be easy, or that things do not have to be paid for. Similarly, I hope that the Conservative Party will make a little clearer than it has in the past that it is easy to have cuts in income tax and also more public expenditure on certain items. If taxes are reduced, obviously the money has to be raised in other ways. I am confident that, when the time comes for the people to decide, they will return their own Labour Members and a Labour Government, with their failures as well as their successes, which are a great deal better than anything the Opposition could produce.

8.19 p.m.

Mr. Timothy Raison: I shall not follow the hon. Member for Liverpool, West Derby (Mr. Ogden). I would rather go back to the main subject matter of the debate today.
One simple point has come over and I want to concentrate on it. It was made by the right hon. Member for Bermondsey (Mr. Mellish), by the right hon. Gentleman the Leader of the Liberal Party and by my hon. Friend the Member for Honiton (Mr. Emery), in their different ways. It was that, whatever the result tonight, the time has come when the country must have a General Election. There is absolutely no question now about that. It may well be that the Government will win. I do not pretend to know, because I have not been following all the chit-chat and gossip going on outside in the Tea Room, because I happen to have been here.
This is the message which must come out of the debate, and I hope that

my right hon. Friend the Member for Penrith and the Border (Mr. Whitelaw) will put it from the Front Bench this evening, because the truth is that the whiff or the odour of decomposition is now about this Government—and also, perhaps, about this Parliament. The Government have been living from hand to mouth for months and, indeed, for years. It may be argued that they have been quite clever and that there has been some virtuosity about the way in which they have managed to do so. I do not denigrate their parliamentary skill, but the truth is that they are no longer in power. They can no longer get their business. It is not just that they cannot get their business on minor matters in Standing Committee—they cannot get their business on the major central issues of policy.
Of course, all the textbooks say that this is one of the crucial tests, and that when the time comes when a Government cannot get their business, that is the time when they should throw in their hand and either have a General Election or hand over to someone else. After all, we must face the fact that yesterday's defeat was not really just about sanctions. Of course, the Prime Minister tried to pretend that it was just about sanctions, that it was a great pity that they could not go on with sanctions, but there it was.
But the fact is that the Government tabled a motion. A Government who were in control of the situation, and who were genuinely in power, would have won their motion. In a sense, it was a motion of confidence, because it was a wide-ranging one about the economic handling of the country's affairs. But they could not even win their main motion last night, which is another proof of the fact that they are no longer in power.
Indeed, the astonishing fact is that for literally years now this Government have not commanded the support of the House in respect of their economic policies. They have maintained their position by a series of tactical ruses, devices and odd little alliances here and there with minority parties and, frankly, very often by ducking the issue. I should like the House to consider what has happened in our important economic debates over the past three years or so. Let us take the three main ingredients of economic policy —the Budget or the raising of revenue, expenditure and incomes policy, which


has dominated so much of our discussions over the last few days and which in a sense is a kind of epitome of our economic problems.
As to the Budget, or the raising of money, I accept that on the whole the Government have done it. They have had one or two rather rude shocks in the Finance Bills over the last few years. Indeed, I seem to remember either the Chancellor of the Exchequer or the Chief Secretary saying after one of these defeats that the whole of the Government's economic strategy had been undermined by the tax changes which had been imposed by the House. Therefore, they have not had an easy ride even on Finance Bills.
What about their record on expenditure, which we have come to see to be a very much more important part of our politics and government than we had thought in the past? The record is pathetic. We should look at what has happened when we have debated the expenditure White Paper. In 1976, the Government were defeated on the main Question before the House by 256 votes to 284. In other words, they had a major defeat in the public expenditure debate of 1976. In 1977, the debate was held on a motion for the Adjournment. But that was not the whole story, because the result was 293 votes to none. The Government knew that they would lose, so they said to their supporters "Do not bother to vote. We are quite prepared to let the House adjourn tonight. We shall get up tomorrow and say ' The House adjourned last night. So what? It does not make any difference '." That has been one of the more discreditable episodes in the life of this Government.
In 1978, with a great rush of courage to their head, they put down a motion—one to "take note" of the public expenditure White Paper. There was something about approving the increases, but they very sedulously ducked the question of whether the proposed levels of public expenditure were acceptable to the House. So once again, the Government funked the issue of whether their public expenditure proposals were acceptable to the House.
I turn to the third arm of economic policy—incomes policy. Here the record is contemptible. I give the Government one bit of credit. In 1975 they brought

forward a White Paper which was approved by the House, and backed it by one of the statutes which underpinned the so-called non-statutory policy. Therefore, speaking in these terms, 1975 was not too bad a year from their point of view. But in 1976 they brought forward the White Paper, on the basis of which presumably they would impose sanctions —certainly pay limits—and had a "take note" debate. As a result, the House never approved the 1976 White Paper or the policies which it embodied.
There was a slight variation in 1977, because the debate on the White Paper took place on the motion for the Adjournment. Once again, the Government funked putting down a motion asking for the support of the House. We had a motion this year, but the Government quite deliberately did not ask the House specifically to endorse the pay limits on which the whole of this fabric that we have been debating in the past few days was based.
Time after time over the past three years we have seen the Government totally lack the courage to bring their own measures before the House. They have relied on a succession of the most shabby and repellent devices. It is appalling beyond belief for the Leader of the House to sit there, with past echoes of his renown as a parliamentarian, and play such a prominent part in a Government who have behaved in this way.
The truth is that in respect of economic policy the Government have lived on bluff for the past three years. I believe that last night their bluff was called. That is crucial. The Leader of the House should tell us how he can possibly justify any claim that the Government are in control of the situation and that they can get their business. How can he possibly say that their economic policies command confidence with anyone? I have already shown how the Government have refused to put them before the House, so we have not been able to say whether they command confidence—at least until last night.
What about the Government's own supporters? What about the Tribune group, which does not seem to be present in very large numbers? Do they support the Government's economic policies? What about the Government's allies in the trade union movement? Even their


own friends do not support these economic policies, and the country as a whole is completely disillusioned with them.
As a number of my hon. Friends and, indeed, several Labour Members have pointed out, the essential truth is that on the key matter—the record on productivity—the Government's record has been appalling. I shall not embark on a long string of statistics, but the fact is that output per person employed in manufacturing industry, which is really the crucial economic indicator, has gone up by a pitiable amount. It went up by about 1½ per cent. between 1973 and 1977. But that is not just a statistic, because the corollary is that at the same time real wages have also risen by the most abysmally small amount. The contrast between us and our major competitors is that their wages and productivity have both risen by a greater amount.
We have been in a state of stagnation because of the Government's economic mishandling. They have totally failed to get to the heart of our economic problems. Overriding this is the total failure of the Government to make the country see that work is and can be worth while. They have utterly failed to encourage skill and to reward enterprise in any shape or form.
Anyone who looks at the next few weeks, assuming that the Government remain in power, will see that what we are in for is a phase of broken-backed politics. It will be like 1940 or 1951 before the changes of Government took place. The message that comes through from this debate is that the country must now be allowed to decide how it wants to be governed and by whom.

8.29 p.m.

Mr. Michael Marshall: I support what my hon. Friend the Member for Aylesbury (Mr. Raison) said about the mood of the debate today. It has been made clear that this is a dead Parliament. In fact, as my hon. Friend the Member for Honiton (Mr. Emery) said, it is a dead-duck Parliament. An essential feature of this dead-duck Parliament is the fact that the wages policy itself is now a dead duck. Hon. Members on both sides have put persuasively the reason why that is so.
Wages policy is not something that can be spelt out in a scientific way. It must react to the mood of the country, of industry, of employers and trade unions. It is quite clear that after a decade and more of wages policy, a swing of the pendulum is necessary. This requires a Government with new thinking. This Government have run out of ideas on the subject.
Those who try to urge upon us a precise definition of our policies must recognise that they are asking us to fall into the same trap that they have fallen into themselves. Such policies must be a matter for very careful judgment in office in the precise circumstances of the time.
Today we are considering not just the Government's activities and record of the last year or two; we are looking at their record over five years. One of the missing ingredients in the Prime Minister's argument today was the Government's failure in industrial strategy. The question of Ford and sanctions is an indication of the kind of disparate activity here. Many hon. Members—even on the Labour side—recognise that it is the height of industrial illiteracy to attack some of the most successful companies simply because by beating them with a big stick the Government can sustain a policy which, as almost every speaker has pointed out, has not been successful.
The industrial strategy that has failed to materialise is much wider than simply a wages policy. Governments of both parties have had a vested interest in trying to achieve a successful economy. I do not suggest that this Government have been lacking in good intentions, but I do say that they have misapplied resources in the industrial area time and time again.
The accelerated investment schemes that Ministers like to talk about provide one example of this. Anyone who follows these matters seriously can give example after example of cases in which such investment has been mere window dressing. We had a classic example of this just before we rose for the Summer Recess, when Unilever gained help to put up a new mill at Thames Board Mills in Workington. This is a company with substantial profits, and it was hard to believe that it was incapable or unwilling to go ahead with investment. In cases where the Government are willing to push money to


those who are willing to accept it we cannot take these as serious exercises in the creation of real jobs. If we do, we defraud ourselves and the country.
Equally, in the ferrous foundry and machine tools schemes many companies are sustained because of this, when rationalisation is essential. By the very process of inhibiting that rationalisation, the market has suffered. Some of the major manufacturers have not been able to take on additional employment as they would have done otherwise. In that area we have seen a distortion of the market that has not served this country well.
On the broad question of the five-year record of the Government, it must be said that over the last year or two they have been trying to rectify the mistakes of the first three years in office. It is not inaccurate to describe the Prime Minister's activities as "attempting to ape a Tory Government ". Examples of this are seen in the whole range of matters that we have urged upon the Government from the Opposition Benches—cash limits, a review of public expenditure and the way in which the Chancellor talks about the money supply. These seem to be manifestations of a Government trying to steal our clothes. We do not object to that if it is in the national interest.
It all adds up to the fact that we have a Labour Government trying to carry out half-baked Tory policies. In doing so, they have alienated their own Left wing. They cannot command its support and they cannot carry out policies effectively which are better emanating from this side of the House. In that situation it is time for the Government to go.
If we are to have any chance of real, thriving, industrial development in the economy we need a Government with a clear mandate. That mandate has expired for this Government. I do not accuse them of failing to carry out their manifesto commitments. Indeed, one of our problems is that they have carried out many commitments that have been shown to be unrealistic. Their extension of nationalisation in aerospace and shipbuilding was typically badly planned, as has been so much of their nationaliastion in the past.
We know now that the Government wish to extend that process if they are returned to office. The time has come for the country to give its opinion. No

hon. Member has dissented from that. I join those who say "Let it be soon."

8.35 p.m.

Mr. Hugh Jenkins: The problems that we have been facing for many years are, as I think most hon. Members will agree, problems of the mixed economy. In a wholly regulated society there is no great problem about determining the share of the product due to the consumer and the share due to the producer.
In our economy, which is in motion and is moving gradually, but inevitably, from private enterprise towards a Socialist-type economy—I hesitate to use the word" Socialist" because it may upset some Conservative Members—great difficulties are placed on any Government in regulating society, particularly a form of society, such as our own, which is highly dependent on external trade and greatly involved in the world at large.
There are many influences and pressures put upon us, including, for example, our mistaken decision to join the EEC, that tend to resist the inevitable move towards a more planned type of economy. We are under contradictory pressures. We have become part of an organisation that is dedicated to the notion of total free enterprise, in theory if not in practice. It could indeed be argued that at least some EEC countries are more Socialist than we are. Their welfare expenditure is an example.
My right hon. Friend the Member for Bermondsey (Mr. Mellish) made one of the best speeches that I have heard from him. I have heard him make speeches in a style with which I agreed, but tonight I was in considerable agreement not only with the style but with the content.

Mr. A. P. Costain: The right hon. Member for Bermondsey (Mr. Mellish) suggested that we should have a General Election very soon. Does the hon. Member for Putney (Mr. Jenkins) support his right hon. Friend on that, and will he do so in the Lobby tonight?

Mr. Jenkins: I shall be happy to have a General Election at any time. I have no doubt that I shall hold my highly marginal constituency whenever the election comes. I have no difficulty


about that, but I prefer electioneering in fine weather so I would choose to win my seat in the spring rather than in the winter.

Mr. Arthur Latham: What about July?

Mr. Jenkins: I do not know that I want to go as far as July. My hon. Friend is distracting me from what I intend should be a short speech. I shall not follow him through the calendar.
Before I interrupted myself I was referring to the speech of my right hon. Friend the Member for Bermondsey. There was a conflict between him and my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), who intervened in my right hon. Friend's speech to point out that there would be no objection to regulated wages if we lived in a society in which everything else was regulated. That is precisely the problem. How can we plan wages in an essentially market economy in which other things are unplanned?
I believe that the Government deserve support. I am sorry that they lost the vote last night, but they did not lose it because of me. The Government would help us more if they did not seem to be so keen on planning the wage sector of the economy and rather less keen on planning the rest of the economy. The planning agreements which were supposed to bring an element of regulation into our society on a larger scale have not been enforced. I well understand those of my hon. Friends who are closely associated with trade unions and who found themselves in very great difficulty, facing a situation in which the Government appeared to be excessively keen on restraining wages and not so keen on restraining incomes as a whole—not worried too much about profits and not even capable, apparently, of controlling prices.
The situation of such a mixed economy is, therefore, one which faces those of us on the Labour Benches with very great problems. The question arises—and this is the point of this debate—in such a situation and because we find ourselves in this difficulty: do we say that because of that we must run away from it and hand over to the free market operators on the Opposition Benches? Not so. It is really quite absurd to suppose, in the

kind of world in which we live in 1978—nearly 1979 now—that the nostrums which the Conservative Party puts forward have anything to offer to us at all.
At a time in which, in their wiser moments, Opposition Members are prepared to admit that this is the sort of society that is inevitably more regulated and in which the Government have got to play a larger part— they will inevitably be held responsible anyway whether they do or do not intervene, and therefore the Government have got to intervene—it strikes me as peculiar that the Conservative Party should have decided to retreat even from its own idea of intervention, moving backwards into a condition in which it existed prior to the Second World War and even before that.
I take the view that the Opposition have nothing to offer to us. Therefore, we have no alternative but to maintain the present Government in office. But I think that we are entitled, in return for the inevitability of our loyalty—because there is no realistic alternative—to ask the Government to look again and consider the fact that—if the economic trends which we have been studying recently tell us the truth, and I am afraid that they do—the rich have got richer under Labour in the last few years. One of the reasons why the rich have got richer and the poor have got relatively poorer—and this is a sorry thing to have to say about a Labour Administration—is precisely that very loyalty about which my right hon. Friend the Member for Bermondsey talked—the loyalty of the trade union movement towards the Labour Government. The trade union movement has restrained itself in an inflationary situation and has made the contribution of wages to inflation considerably less than would otherwise have been the case.
This is a matter of which the Government cannot be proud. I believe that although we shall go into the Lobby tonight firmly in support of the Government, and although, on balance, they deserve their vote of confidence, they will not continue to deserve it unless they themselves are truer to the whole basis, theory and instincts of this party than they have been hitherto.

8.44 p.m.

Mr. Patrick McNair-Wilson: The hon. Member for Putney (Mr. Jenkins) was preceded by a number


of Labour Members who condemned the performance of the Government over the past four years. The hon. Member's last comment, that the poor have got poorer, makes a mockery of the fact that we are supposed to have confidence in the Government's ability to repair social justice.
It is entirely appropriate that this debate is being held at the beginning of the pantomime season for this Christmas. It is a season when magic wands turn mice into horses and pumpkins into golden coaches, and massive defeats, such as that of last night, into apparent victories, which the Government hope for tonight.
What happened last night in this House was a defeat for the Government and it was the loss of a vote of confidence, because the Government now have no economic policy worth talking about. It is in total disarray. It has been brought down not merely by Opposition Members but by the total division of the Government party itself.
The genesis of this failure is the failure of the Government's economic policies for four years. They are policies which have halved the value of the money of our people and created record inflation, record unemployment and record numbers of bankruptcies. Yet we are asked tonight to have confidence in the Government's ability to manage our economy in the future.
Of course, the reason why the Government have failed so dismally is that they live in this strange mixed-up world of part-Socialism and part-free enterprise. They do not understand how to make free enterprise work. They have not yet—because they are afraid to let the British public see it—dared to show us how red in tooth and claw they would like to be if we had the pure Socialism that the Chancellor has threatened to let us have on many occasions.
It is a fact that because the Government cannot go the full distance which Left-wingers on the Labour Benches have been suggesting—of controlling rents, prices and profits, with all the paraphernalia of government—they cannot make their incomes policy work, and it is a failure. This afternoon the Prime Minister told us that because he is a democrat and because of the decision that was

taken last night, he is now beginning to dismantle that policy.
It was the Prime Minister's vagueness about what is to follow after the collapse of this policy that entitles us to believe that the present Government have truly run their course. They have rested their argument, over the last three years, at any rate, on the belief that the wage claims of the people of Britain have created inflation. That is totally false.
Inflation has been created by the Government, not by the people who are trying to keep their standard of living together and who see it falling as a result of the Government's policies. The Government's policies have led to the run on our currency and the fact that we now find that things which we were able to buy at one time are now beyond our reach. The failure of this incomes policy has been caused by the man coming home at the end of the week and showing his wage packet to his wife, who says "It is not enough for us to live on. It does not buy the same as it bought last week." People have been asked to shoulder new burdens all the time, with visions of the promised land, and it has never come.
The Government's incomes policy will not work. Who are the Government to tell anyone what he should earn? This argument is not about merely numerical formulae—5 per cent., or whatever it is about freedom or totalitarianism. If we are to have the Government dictating how much people should earn, it will not be long before the Government are telling people where they can earn it as well.
It is because of this fear that I, as a private entreprenuerial member of a party which believes in private and free enterprise, totally reject the wages policy that is being employed by the present Government. Whether or not the Government stand by their 5 per cent. policy and ask the people to support it, they will not be stopped from driving up interest rates, mortgage rates, and all the rest, and asking people to digest that as well. It is because these things have failed that we are here tonight.

Mr. E. Fernyhough: Will the hon. Member give way?

Mr. McNair-Wilson: No, because the time is very short. I apologise to the right hon. Gentleman.
The Prime Minister is no longer in command of his Government. He is not able any longer to give us firm government. Indeed, I think that it was the right hon. Member for Huyton (Sir H. Wilson), on another occasion, who described a Government as the fag end of a fag-end Parliament. Those words are very appropriate tonight.
Like King Canute, the Prime Minister sits on the beach hoping and praying that the threat of inflation will go away. But unlike King Canute, none of his supporters any longer believe in him. With the Chancellor of the Exchequer, he is alone with a wrecked policy surrounding him. If he has the confidence that he ways tells us he has in what the people feel about his policies, let him put them to the test now'. I can tell him that he will get a very rude shock.

8.50 p.m.

Mr. Arthur Latham: Earlier today my right hon. Friend the Prime Minister extolled the virtues of being in bed early. I must confess that that is where I was last night—too early. But I must make it clear that it was a quite deliberate abstention on my part because, along with a lot of other Government supporters, I felt that the aspect of the Government's policy that was being debated had to be challenged. I have no regrets about joining in the abstentions and thus contributing towards the consequence of the votes, save that sometimes in this House if an hon. Member wishes to support a point of view he finds himself in rather strange company. I never feel happy when I go into the Division Lobby with the Conservatives. I must also confess that sometimes when I go into the Division Lobby with my own party I also find myself in strange company. It is not always an easy choice to make.
The two matters to which I wish to draw attention do not amount to a rehash of last night's debate. However, they raise two very important factors which ought to be dealt with and which I want to put to my right hon. Friend the Lord President.
First, I remind my right hon. Friend of the submission which I made to the Procedure Committee—and it has been made by others in the past and since—

that a Member of this House is often put in an extremely difficult position when he has two courses of action open to him either of which might be regarded as unacceptable.
My right hon. Friend will recall that it was put to him yesterday, as at other times, that it might have been reasonable for the Government to table an enabling motion which would have made it possible for a third point of view not only to be heard in this House but to be voted on in the Division Lobbies. I cannot understand why there is such difficulty about making it possible, when there is strong feeling among a substantial number of hon. Members, for that point of view to be debated in the general debate and then voted on by means of a second amendment called by the Chair.
The problem about the Chair's selecting a second amendment is that procedurally there is not the time available for a vote on such an amendment unless the Government themselves table an enabling motion. However, there is an argument that if that facility were granted to a substantial number of Back Bench Members on either side of the House it would create difficult precedents for minority parties. I cannot understand that argument, because it is perfectly proper for minority parties on occasion to express a distinctive point of view. It is healthy and democratic that if a point of view is held by a substantial number of Back Benchers, that view should be heard and voted upon.
I hope that my right hon. Friend will try to explain to the House what insurmountable difficulties he sees in the way of providing that facility on future occasions. That would have been one way of avoiding the difficulty which occurred last night.
Against that, in retrospect I suppose what happened last night was not such a bad thing. It is about time that, as Members of the Mother of Parliaments, we got away from the rather juvenile assumption that the Government must win every vote, however minor or however major, and that the Prime Minister of the day has to be in command of his supporters so that he can tell them, via the Chief Whip, what they should do and which way they should vote.
In historical terms, one development that can evolve from last night's events is that


parliamentary control over the Executive can be enhanced. Whenever the Government lose on a particular matter that they have recommended, we go through the pantomime of a motion of confidence. We should accept that it is proper for Parliament to have the opportunity to pronounce on particular issues.
The Leader of the Opposition argued, when my right hon. Friend the Member for Huyton (Sir H. Wilson) was in office, that there is a distinction between a minor issue on which a Government might be defeated and an issue that is regarded as a major plank of their policy. I can see that distinction. But if Government supporters believe that many of their policies commend themselves and that the alternatives offered by the Opposition are unacceptable, what is undemocratic, improper, unhealthy or unconstitutional about a group of Members taking the opportunity to express that view? What is wrong with their using the parliamentary process to arrest the Executive in the path that it is treading and to cause it to have further thought?
There were sneers from the Opposition about the Prime Minister's statement, but I welcome what my right hon. Friend said at the begining of his speech today. It could be regarded as a magnanimous acceptance of the views and will of the House. I think that that is healthy.
Some people argue that in a so-called hung Parliament more power is given to Back Benchers to arrest the Executive. That is a desirable development. I do not see why we must have a hung Parliament for that to be possible. Hitherto, when a Government had a majority of 30, 40 or 50 and when 31, 41 or 51 of its members felt strongly or hostile about a particular policy, it was regarded as wrong and disloyal for those members to give expression to that point of view because confidence in the Government would be shaken and there would have to be a vote of confidence or censure the following day.
Before I became a Member of the House, I spent a number of years in local government. In local government each member of a council, whether Labour or Tory, is a member of the administration in one sense or another. Certainly those who belong to the

majority party regard themselves as members of the administration. One of the desirable features of collective decisions is that members pool their votes into a collective judgment and agreed decision. In that sense, the principle of whipping and the proposition that the administration has its way is sound, because all members take part in the democratic process.
I do not wish to criticise the Labour Government in particular. My criticism is of the way the system of government has worked over the decades and centuries. The system is based upon the orginal authority of the Monarch, which is handed on to the Prime Minister. Extreme powers of patronage are exercised by the Prime Minister of the day. The Chief Whip is an appointee of the Prime Minister. His coterie, who are called the Government, make the decisions, not the members of the majority party.
If the events of last night and today move us away from that situation and towards a more mature constitution, in which the House of Commons can exercise a functional control over the Executive, that will be desirable. Whatever the arguments about confidence tonight, I hope that in the long term that will be the effect of the events of the last 48 hours.
Some people outside the House might ask why, if I did not vote with the Government last night, I vote with them tonight. Last night we were invited to vote on a specific issue. The House took the right decision. Tonight we are being asked to vote on a different issue—whether the Government should continue in office. I believe that the House will take the right decision again. We should give two marks to the House of Commons. One should be given for last night, and one for tonight. I hope that this will be the forerunner of many occasions when Back Benchers will be able to assert themselves.

9 p.m.

Mr. A. P. Costain: The hon. Member for Paddington (Mr. Latham) said that the House would tonight make the right decision. The right hon. Member for Bermondsey (Mr. Mellish), the former Labour Chief Whip, said that he wanted a General


Election. I gather, therefore, that the House will tonight make the right decision—one which will lead to a General Election.
Let us consider what has happened in the debate. We heard from a rather tired Prime Minister who seemed rather despondent at the shock he suffered last night. He said that the economy was in ruins, and he reminded me of the cartoon showing the person who had had a smash on the motorway. He said that he would take the advice of the CBI, the TUC and the Tribune group. That is a very good mixture.
We heard the hon. Member for Liverpool, West Derby (Mr. Ogden) admit that he had been brought in by the Whips to make a speech. He had been trying to make a speech for three days, but the House had been too busy. Tonight the Prime Minister could get so few people to support him that the hon. Member was able to speak.
Next came the hon. Member for Putney (Mr. Jenkins). I have the privilege and honour to sit on the Public Accounts Committee with him. He makes a great contribution to it, but when one works closely in a Committee with a member of that sort one can tell whether he has done his homework. It was obvious from his speech tonight that he had not. He was brought in at short notice.
Throughout the debate the Labour Benches have been empty. That was because the Prime Minister was unable to get the support he wanted. We are seeing the pathetic end of what could have been a successful Administration.
We all know what happened. Labour came to power and for six months it carried out a good sales trick in order to get re-elected. The Government then indulged in a binge, spending the nation's money until the IMF came in and told them to get back to proper policies. Ever since the IMF restricted the Government's expenditure the Prime Minister has had difficulty with the Tribune group and others who accused him of failing to carry out Socialist policies. The IMF told the Prime Minister that the country was going bankrupt. We had the dramatic experience only last week when we saw that this once great nation was not even strong

enough to take its part in the European monetary system.
Let us consider for a moment what has gone wrong with the Labour Party. The trouble is that it has gone looking for votes. Its housing policy is in ruins. That is because the Government were after votes. They thought there were more votes to be won from tenants than from landlords, with the result that the only thing in short supply in this country is housing. The only commodity that has been controlled since the Labour Party came back after the war has been housing.
At one time pension funds would invest in residential property, but because Labour imposed control to help the tenant housing has dried up. The same has happened with jobs. Unemployment today is higher because the Labour Government thought they could get more votes by passing laws making it difficult to sack workers. They thought that that would keep men in work, but it has meant that employers have been reluctant to take on labour. There would be far less unemployment but for the Labour Government's legislation.
Time is too short for me to follow the pattern through, but Labour Governments have always failed because they have considered control to be more important than incentive. Instead of defending his policies the Prime Minister sought today to chide my right hon. Friend the Leader of the Opposition about her intentions. He wanted to know what she would do. The time for her to tell the country that is during a General Election campaign. If the Prime Minister is so curious to know what is Opposition policy, he should give it a chance. Let us have a General Election.

9.5 p.m.

Mr. Norman Buchan: We are no longer simply discussing the question of incomes policy but the question of which Government should be in power. I would humbly suggest to the hon. Member for Folkestone and Hythe (Mr. Costain) that history is against him. It is becoming necessary to have a social involvement. Facing me is a party which has the impertinence to seek power on the strength of a demand to return not to the early twentieth century but to nineteenth centurylaissez faire

Mrs. Kellett-Bowman: Let the people judge.

Mr. Buchan: Yes, indeed. Let the people judge. If there were no other argument for voting for the Government tonight, it is that the economic power of this country, left to thelaissez-fairepolicy of the Opposition, has been passing into fewer hands. In 1910, the top 100 companies of this country owned 15 per cent. of the output. In 1950, the figure had increased to only 20 per cent. In the last 20 years, however, that figure has shot up. Two-thirds of the wealth being produced is now owned by the top 100 companies. That is not many companies. The directors I see opposite probably control between them over 100 companies.
The question is whether we allow this great accretion of power to be left in the hands of the companies or whether we move over to a closer social ownership and social control. "Leave it to the people" means leaving it to the social control of the people and not to the companies.
At the same time, we see the beginning of what may be the first technological revolution. We are stepping over the threshold from pre-history to history with fewer and fewer people required to produce output.
It has to be asked whether increased leisure time in future should be equated with mass unemployment. That is what will happen if matters are left to the companies and to the party which represents them. The alternative is social control genuinely in the hands of the people, which can be achieved only through the expression of the working people of this country. That means a Labour Government.
The hon. Member for New Forest (Mr. McNair-Wilson) made great play of the fact that he supports the Opposition demand to defeat the Government tonight on the grounds that he is himself a private entrepreneur. As Mandy Rice-Davies said "He would, wouldn't he?" That is precisely the argument with which we are dealing.
I want to say a few words to my own Government. My hon. Friend the Member for Paddington (Mr. Latham) is right. It is an intolerable situation when we place so much emphasis on one aspect of policy that if it is rejected by the House, this is seen as a crisis for the Govern-

ment which must demand, perforce, a vote of confidence.
I voted with the Government last night and I am voting for them tonight. If I may quote Rab Butler, they are not only the best Government we have but, in the light of the alternative, the best Government that we can have. We need a Labour Government responsive to the working people.
By placing emphasis on incomes policy and a bad incomes policy—it is a policy of wage restraint and not an incomes policy—the Government are giving the argument for a Socialist incomes policy a bad name. We cannot ask working people alone to shoulder these burdens or plan one-third of the economy while leaving the planning of the private sector untouched.
We can do only three things with our output. The first part is what we spend on the social wage, on roads and schools and so on. The second is what is returned to industry in the shape of investment. The third area is private income. The Government have tried to solve the problem by dealing only with the third. No wonder there was opposition to them in the working class movement. This they must rectify. They now have the opportunity, and it is for that reason that we support them.

9.11 p.m.

Mr. William Whitelaw: My first and pleasant task is to congratulate the hon. Member for Pontefract and Castleford (Mr. Lofthouse) on his maiden speech. He said some very nice things about his predecessor, the late Joe Harper, which struck a chord in the House. Many bon. Members will understand why I have a fellow feeling for anyone in either party who has spent a long time in a Whips' Office. I certainly had such a feeling for Joe Harper.
The hon. Member for Renfrewshire, West (Mr. Buchan) could not have read the Prime Minister's motion, because he said that he was making a choice between two different Governments. The motion in fact asks him to support this Government at this moment or to get rid of this Government and this Parliament and have an election. That is the choice in the motion, not the one that he described,
In devising this motion, the Prime Minister realised that he could not seek a vote of confidence on the basis of his Government's record. No one can be surprised at that, as my hon. Friend the Member for New Forest (Mr. McNair-Wilson) said, when setting out the facts of the Government's record. No wonder the Prime Minister could not do that. Nor did he favour his chances of getting his hon. Friends below the Gangway to support him on a motion directed to pay policy. If he had heard the speech of the hon. Member for Bethnal Green and Bow (Mr. Mikardo), he would have realised how right he was.
So the right hon. Gentleman has asked the House just to support his Government's "determination" in future—nothing else. That in itself is a sorry commentary on almost five years of Labour government and upon the amount of support that the Prime Minister can expect from some of his own followers, on whom he relies if he is to stay in office.
My right hon. Friend the Leader of the Opposition not only exposed the extent of our decline under Socialism; she also set out clearly how a Conservative Government will seek to reverse that miserable slide. Those of us with experience of the Prime Minister have learned to look behind the facade and to study the realities. Some of those realities were exposed in the brilliant speech of my right hon. Friend the Member for Worcester (Mr. Walker).
Any judgment by the House about the Prime Minister's future determination must surely rest not on the impression that he would like to give about his past record but on what he has actually done. Today he poses as the strong man fighting inflation in the best interests of the nation. He has referred at times recently to the difficulties that the nation has faced over prices following the fourfold increase in oil prices in 1973. He may now like to give the appearance of total resolution against inflation. He may even persuade himself that, as he said today, he has consistently and continuously fought against it.
But what was the right hon. Gentleman up to when the nation was seeking to fight inflation following the oil price increase in 1974? I remember it very well,

because I was Secretary of State for Employment at the time. He was in Aberdare and this was what he was saying, and he must listen to it over and over again:
 I wanted to come into the mining valleys to place the Labour Party firmly behind the miners' claim for a just and honest wage. Mr. Heath is arguing that he is fighting inflation. That is utter drivel.
Mr. Ioan Evans (Aberdare): The Aberdare speech of my right hon. Friend has been referred to on numerous occasions. He spoke on a large number of topics and what the Opposition are failing to say, and what my right hon. Friend modestly has not stated, is that the Tory candidate lost his deposit in that seat.

Mr. Whitelaw: The hon. Gentleman seemed for a moment to be trying to excuse his right hon. Friend for what he had done on that occasion, but his right hon. Friend did not wish to be excused. He reaffirmed it, and so he is now polite, or finds it convenient to be polite, to my right hon. Friend the Member for Sidcup (Mr. Heath); but at that time the Prime Minister did everything he could to undermine the efforts of my right hon. Friend to contain inflation. What is more, I am in a position to know just how much his words mattered at that time and how much they did to undermine that policy; and so I can assure the right hon. Gentleman that whatever we may think about his policies today we as a Conservative Party have not and will not undermine what he has been doing.
Today the right hon. Gentleman seeks to portray himself as the man who is standing up to powerful unions in the national interest. But in fact he sold the pass long ago and he himself inflicted grave damage on the nation and, I believe, on the long-term interest of the trade union movement when he deliberately undermined his right hon. Friend the Member for Blackburn (Mrs. Castle) in 1969. So when he considers the NUPE action in the Cheshire homes today, let him remember that he is reaping where he sowed.
When we come to the appalling inflation record of the Labour Government in 1975 and 1976 the Prime Minister has two means of trying to get out of it, two alibis. The first is that he really was not anything at all to do with the Government at that time and it was all the fault of his


right hon. Friend the Member for Huyton (Sir H. Wilson). But of course he was the Foreign Secretary and one of the most important men in the Government. Another is that it was all the fault of the previous Conservative Government. But there again the true situation was plainly exposed by the right hon. Lady the Member for Hertford and Stevenage (Mrs. Williams) in October 1974 when she said:
 There is no evidence at all of price increases stored up in the pipeline 
So much for the alibi of blaming the previous Conservative Government.
The Prime Minister talks today of his determination to provide full employment, but the hard fact is that his determination will not help the 400 people who have lost their jobs every day that this Labour Government have been in office. Even during the period when he admits responsibility for the Government he has contrived and continued to run away from reality. He tried at one time to show his interest in education. A great education debate took place and the reality is that nothing happened. He then expressed great interest in the family. Very good; but no new policies resulted from that initiative. The right hon. Gentleman seems prepared to take responsibility in unusual areas.

The Prime Minister: There were a lot of babies, so do not try to undermine me.

Mr. Whitelaw: The Prime Minister can take whatever responsibility he likes in that area.
The right hon. Gentleman then felt that people were worried about vandalism. He became concerned about that topic, and the Home Secretary was asked to hold a conference to which the Prime Minister sent a special message. But again nothing happened.
In October we had the prize charade of all. The Prime Minister went on television and told the country that he did not intend to have a General Election because there was no need to do so in the national interest. [HON. MEMBERS: "It was not in October."] Well, it was just about that time. The truth was that when he was trying to pretend that not to hold an election was in the national interest, he was at the same time not

going to the country because the private polls told him that if he did so he would lose.
Then, once again, the Prime Minister began to try to present a grubby retreat as a glorious advance, which is another of his techniques. But, alas for this mirage, the Left wing has refused to lie down. The right hon. Gentleman failed to convince the Labour Party conference on the central issue of Government policy. Indeed, he also failed to convince the TUC. Now he has been humbled by his own Back Benchers.
All the time the right hon. Member for Bristol, South-East (Mr. Benn) is breathing down the Prime Minister's neck. [HON. MEMBERS: "Where is he? "] The front is the moderate middle-of-the-road Callaghan, but the reality is the manifesto of Mr. Benn and his friends, and everybody knows it.
Even if the Prime Minister really wanted to be what he pretends to be and not what he is, I doubt whether he could take his colleagues with him. Certainly, the hon. Member for Putney (Mr. Jenkins) and others who devoted their remarks to pleading for more Socialism, would seem to indicate that.
Nobody can portray the Leader of the House as a realistic figure any more. Personally, I feel sorry for the right hon. Gentleman. He was at home below the Gangway as a brilliant speaker and rebel. Now, not surprisingly, he has not taken kindly to being an establishment figure.
Many speakers in the debate, faced with what is undoubtedly a retreat from reality, have stressed the underlying dangers that face Britain. The tactic—it can hardly be called a policy—of making tough-sounding speeches about figures of 5 per cent. is being shown up for what it always was—namely, one more attempt by the Prime Minister and the Labour Government to dodge reality.
Nothing the Prime Minister said in his speech this afternoon gave any hope that even now he intends to face the facts as they are. Our charge against the Government is that they have done, and are doing, nothing whatever to give the spirit of responsibility even a glimmer of encouragement. There is noting in their policy to give hope to responsible people in industry, to the trade unions and others who want to get on with the job.


There is nothing which in any way will restore a sensible bargaining balance and allow fair and reasonable negotiations to proceed.
On the contrary, in everything the Government do, from their grubby sanctions efforts to their tax policies, from their so-called industrial strategy to their casual attitude to the respect for the rule of law, they have helped to undermine the fight for responsibility in our country and in our nation today. More incentives to work the extra hours or to acquire the extra skill—the Government have destroyed them. More encouragement in setting up new businesses and creating new job opportunities—the Government have made it as difficult as they possibly can for a business to take on more staff. More chance to buy one's own home from local authorities—the Government hate the idea. Better standards of education—the so-called debate has long since run into the sand. More chance for responsible and democratic voices in trade union affairs—the Government have nothing at all to suggest.
There will be no closing of the gap with other countries. There will be no lifting ourselves out of the" less prosperous countries club "to which the Prime Minister has now elected us until the Government's policy starts flowing completely the other way on all these fronts. We must leave behind the escapist charade and face the real task of making responsibility pay once more in this country. We must pay attention to creating more wealth and pay more attention to bringing up our industrial productivity, at least to the level of many of our competitors in the world, where it sags so sadly at present. That is the task to which we on these Benches will dedicate ourselves whenever we have the opportunity. But, apparently, for the moment the Prime Minister will simply use all his energies to cling to office somehow.
Like the Leader of the Liberal Party, I am convinced that it is against the best interests of our country for this phantom Parliament to continue. That has been the underlying theme of many speeches today from both sides of the House. However hon. Gentlemen may vote tonight, I cannot understand how it can be in the interests of any part of the United King-

dom, whether Scotland, Wales or Northern Ireland, for this particular Parliament, and this particular Government, to carry on any longer. I accept that the underlying problems in these countries will certainly not be solved by a Government without authority. Nor is there any reason why the solution to their special problems should suffer a setback from the election of a new Parliament.
I would like to make it clear to the Scottish nationalists that after Parliament has decided to implement the Act, if there is a "Yes" vote in the referendum, we believe that the first Assembly elections should not be long delayed. We believe that they should be held—that is exactly what the Prime Minister himself says, so I do not know why he laughs —within six months of the day of the referendum. Like my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery), I do not believe that the Government have the genuine confidence of this House on which their constitutional position so crucially depends.
Perhaps I might interpose a non-controversial note at this point, since the right hon. Member for Anglesey (Mr. Hughes) has just entered the Chamber. I am sure that it is one which will be echoed throughout the whole House, even at this point in the debate. May I say that while I do not welcome the fact that his vote will be in the wrong place tonight I am sure that we are all delighted to see the right hon. Member back again. Whatever has been achieved by him, no one in this House will ever doubt that he has done his very best to gain some comfort for this country.
If I may now return to the motion, I believe with my right hon. Friend the Member for Brighton, Pavilion that the Government do not have the genuine confidence of the House on which their constitutional position must depend. The truth, therefore, is that whatever subtle manoeuvrings the Prime Minister may make now, he and his Government have lost the authority to govern in this Parliament. I do not believe that they will be able again to govern effectively so long as this Parliament continues. That is why I ask my right hon. and hon. Friends, and all hon. Members in this House who have the true aims of parliamentary government at heart, to vote against the motion.

9.30 p.m.

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): I want first to join with the right hon. Member for Penrith and The Border (Mr. Whitelaw) in two of his remarks with which I heartily concur. First, I thank him for the gracious way in which he received the return of my right hon. Friend the Member for Anglesey (Mr. Hughes) who entered the Chamber towards the end of the right hon. Gentleman's speech. I am sure that the whole House knew, when the announcement was made, that the mission on which my right hon. Friend was going was bound to be extremely difficult. However, my right hon. Friend took on that task immediately and I am sure that he has discharged it with the great skill and integrity which this House knows he possesses. I thank the right hon. Gentleman for the way in which he received my right hon. Friend back to the House.
I also join with the right hon. Gentleman in the remarks he made about my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse), who made his maiden speech earlier in the debate. Those of us who heard it agreed that it was a speech which greatly contributed to the debate and to the subject which has been uppermost in the debate. My hon. Friend paid a special tribute at the beginning of his remarks to Joe Harper, the previous Member for that constituency. Those of us who saw Joe Harper, even on the day before he left and before his death, who remember how he was facing up to his trials on that occasion, are greatly indebted to my hon. Friend for the tribute that he paid to Joe Harper.
In his earlier remarks the right hon. Member for Penrith and The Border sought to indicate that the official Opposition were doing all that they could to assist with the Government's pay policy. The right hon. Member said, if I have his words correct, "We have not and will not undermine the policy in any way whatsoever." That is not quite the impression that I received, but it may well be the case that the Oppositionhave been going around the country secretly, urging people, behind the scenes, to back the Government's pay policy at every turn. As was said in another context and on another occasion" They have done good by stealth. The rest is on record."
Most of us can recall exactly the way in which the Conservative Party and the newspapers that give it such support have acted. I know that there is a distinction to be made concerning the right hon. Member for Lowestoft (Mr. Prior). I do not wish to snatch from his brow the garlands bestowed upon him a little earlier in the proceedings by the Prime Minister. For the rest of the Opposition, it would be much more true to say that they have attacked the Government's policy in a way that makes the criticisms of the Daily Mailand theSunnewspapers look tame by comparison. They have done everything in their power to undermine the Government's policy and should not, at the end, pretend anything different.
I have heard almost every speech made in the debate and it is right that I should seek to reply, in so far as I am able to do so, to the general debate that has taken place on incomes policy and pay policy, as that has been the dominant feature of the debate. The right hon. Member for Worcester (Mr. Walker), my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) and others engaged in that debate, and I shall do so too. Before doing so I shall make a few comments on some other aspects.
Contrary to the general idea that has been purveyed from Conservative Members, it is the fact that this Parliament, despite the domination of economic policy, incomes policy and matters of that nature, and despite its difficulties and the Government's narrow majority—some think that that is an advantage but I still think that it is a disadvantage, from time to time—has carried through considerable measures in other areas. I believe that they have been carried through greatly to the advantage of the United Kingdom.
Despite all the difficulties, we have carried through great programmes, including the proposed establishment of Assemblies in Scotland and Wales. Many Members of Opposition parties have assisted us in so doing, including the hon. Member for Cardigan (Mr. Howells). We have carried through those measures despite all the opposition from many quarters. We have carried them through despite many setbacks.
The hon. Member for Cambridge (Mr. Rhodes James) writes history as well as


failing to make it, and I am sure that he will acknowledge that in the period that he has covered in his historical writings there have been numerous occasions in British history when the House and the country have acted too slowly in the face of tumultuous events in other parts of the world, especially in parts of the British Commonwealth.
I believe that what we have done in this Parliament is to act in time. We have recognised the demands that have come from Scotland, Wales and other parts of the United Kingdom. We have acted in time, and because we have had the determination to carry matters through this Parliament will be able to claim that it has made a momentous contribution to maintaining the unity of the United Kingdom and holding it together generally.
We have done so because we have been prepared to recognise the just demands that have come from different parts of the United Kingdom. The House would make a sad mistake if it were to set aside those demands, to set aside the achievements and the way in which demands have been translated into practical action, and say that they did not count. That would be the way to injure what has been done. When we go forward to the referendums on 1st March I believe that the people of Wales and Scotland will express their view and they will thereby underwrite what the House has spent a considerable part of its time in dealing with during the present Parliament.
Conservative Members, especially the hon. Member for Aylesbury (Mr. Raison) and others who took a similar approach, said that during this Parliament we have not been dealing with major matters and that in the present Session the measures before us are not considerable, and that it is contemptuous for the House of Commons to deal with great sections of the community in that way. I happen to know that for the past two or three years the seamen, through their union, have been urging and demanding that we should introduce a Bill to deal with their industry. Such a Bill has been introduced and we shall carry it forward. I do not know why the Opposition Chief Whip should think me so funny—[Interruption] I do not know why the two Chief Whips should think it is so funny. When we catch

both of them laughing together we have a right to be suspicious. I have to watch that very carefully.
I say to the hon. Member for Aylesbury—if it has not been brought to his attention before, I am bringing it to his attention now—that this measure, among many others, is one that has been urged on us by a great section of the people in the country.
There are measures such as the Education Bill that we are introducing. A huge amount of work has to go into the preparation of the measure, apart from the Bill itself. There is also the Public Lending Right Bill, and I know—[Interruption] We can see from the reaction of Conservative Members what sort of intellect the nation can expect from the Conservative Party. We intend to carry that measure through, and I am sorry that the Shadow Leader of the House has not been able to come along and give his support.
On a series of other themes we have carried through great legislative changes, and there will be others going forward in this Session. When we return to the House in the middle of January—[Interruption] The House of Commons voted the other day to come back on 15th January and we are accepting the decision of the House. [Interruption] Laughter seems to be breaking out on the Opposition Benches. I think that the right hon. Member for Lowestoft misunderstands the position. When we come back next month, one of the major measures that we shall be carrying through the House—admittedly a highly controversial measure—will provide considerable extra funds for the National Enterprise Board and for the very necessary work that we want to carry forward. Let no one tell me that that is not an important measure, and let no one tell me that it is an uncontroversial measure. It is one that is of vital importance to large numbers of people throughout the country, because it concerns their jobs, their industries and their protection.
Indeed, anyone who looks over the whole period of this Parliament will see that, despite all the pressures, difficulties and dangers with which we have had to contend, we have carried through major measures of reform concerning industry and industrial relations. We have wiped


out the measure that the right hon. and learned Member for Surrey, East (Sir G. Howe) helped to place upon the statute book, and have put in its place a far more comprehensive set of laws than we have ever had before for dealing with industrial relations. They will stand this country in very good stead in the years to come.
I say to Conservative Members, who wish to brush these matters aside, that through these four years we have carried through a series of great reforming measures. During the remaining months of this Parliament we shall keep up that record.

Mr. Amery: The right hon. Gentleman has made what I might call a retrospective Business Statement. Will he tell us whether, before the House rises finally, his right hon. Friend the Member for Anglesey (Mr. Hughes) will be making a statement on his mission to Africa, or whether a Minister will be making it on his behalf?

Mr. Foot: We do not often have the advantage of the attendance of the right hon. Member for Brighton, Pavilion (Mr. Amery) at Business Statements, but I shall be happy to arrange for my right hon. Friend to make some kind of statement when we return after the recess. I am doubtful whether we should have a statement on the subject tomorrow. I do not believe that that would be the best way to proceed. I think that we should first of all see what my right hon. Friend the Member for Anglesey has to report to the Prime Minister and the Foreign Secretary on the matter. I think that that is the way in which to make the best use of his report on his mission.
I want now to turn to what has been a major part of the debate today. I do not want to avoid it at all, because I believe that the subjects dealt with in the debate have dominated British politics for many years past and will influence British politics for many years to come.
Those hon. Members who were absent from the earlier part of our proceedings should read the speeches of many of my hon. Friends and, indeed, those of some Opposition Members. I think in particular of the right hon. Member for Worcester, my hon. Friend the Member for Bethnal Green and Bow, my hon. Friend the Member for York (Mr. Lyon), my right hon. Friend the Member for Ber-

mondsey (Mr. Mellish) and my hon. Friend the Member for Putney (Mr. Jenkins), all of whom made major speeches discussing what have been agonising arguments that have continued in respect of this matter, particularly on the Labour side of the House. They are also arguments that continue throughout the country, and it is as well that this House of Commons should face up to them.
The right hon. Member for Worcester is an honest man, and we know what he means. He did not spell it out today, although he has done it on previous occasions with such clarity that no one can dismiss it, but I know that he favours, as does the Liberal Party, a full-scale statutory incomes policy laying down what should be paid and what should not be paid in different spheres, possibly creating some board to perform that function and no doubt attaching to it some of the penalties involved in a full-scale statutory policy.
That is what the right hon. Gentleman and the Conservative Party introduced when last in power, and that is what the right hon. Gentleman still favours. That is also what the Liberal Party favours.

Mr. David Steel: indicated dissent

Mr. Foot: I am sorry that the hon. Member for Cornwall, North (Mr. Pardoe) is not present, because he might stick up for his own policy. I am not sure whether the Liberal Party continues to do so, but it is a fact that the right hon. Member for Worcester favours a return to the full panoply of a statutory policy.
I was a member of the Government in 1974 who spent a considerable part of their time dismantling that statutory policy. From what I saw at the Department of Employment at that time, and from what we inherited, I would not recommend that the country or this House should ever again return to that kind of statutory policy. I say that most strongly, because I believe that in some circumstances, as we saw during that period, it introduces the criminal law into industrial relations, which is a very foolish thing to do. I also believe that it can be done only by the most bureaucratic apparatus. Although the Pay Board was presided over by a most skilful and eminent civil servant, there is not the slightest doubt


that that approach imposes a kind of unworkable corporate body on the whole economic system of the country. I hope that the House and the country will never seek to return to that kind of solution. I know that the right hon. Member for Lowestoft is not quite cured of that, because every now and again he agrees with his right hon. Friend the Member for Worcester. However, I let that pass.
My hon. Friend the Member for Bethnal Green and Bow took an exactly opposite view. He argued with devastating force that any kind of policy of that sort, and what we have sought to establish over the past few months, is riddled with so many anomalies, injustices, awkward aspects and difficulties that it becomes either unworkable or unfair or both, and that it should never be embarked upon. My hon. Friend argued that with very great skill, but what he did not face was what will happen if inflation on the scale of 10 per cent. 15 per cent. or 20 per cent. is recreated. My hon. Friend may believe that will not happen. If he believes it will happen he should tell us whether there are other methods by which it can be avoided, or whether he is arguing that it does not matter.
I do not think that my hon. Friend would accept the last proposition, because nobody could argue that a return to an inflation rate of 10 per cent. or 15 per cent. would be anything other than a disaster, particularly at a time of such international danger. In 1979 and 1980 the whole Western capitalist world will be in a state of motion and difficulty such as we have not known since the 1930s. If, in that period, we were to see such a scale of inflation as that recreated, it would be utterly damaging to this country. It would also rob this country of any power to have a major influence on the other nations of the world.
I understand as well as anyone the dilemmas and difficulties that hon. Members describe. Quite often the most serious arguments take place inside the Labour Party and not with the Opposition. We do not have to make any apologies on that score, particularly when we have listened to the whole debate and seen what has happened.
My hon. Friend the Member for Bethnal Green and Bow recalled that

some of us had contributed to a "Keep Left" pamphlet—which has already been quoted by my hon. Friend the Member for Fife, Central (Mr. Hamilton). In that we discussed some of these questions, questions of incomes policy and wages policy and how they related to the rest of economic policy. My hon. Friend the Member for Bethnal Green and Bow, the Prime Minister, myself, my right hon. Friend the Member for Blackburn (Mrs. Castle) and others all signed that pamphlet. We were all arguing that we should seek to get some form of planning into this sphere as into other spheres of economic policy. I believe we should certainly seek to do so
My hon. Friend the Member for Bethnal Green and Bow has sometimes asserted that one can move to that end only when planning has been established over a much wider field. I quite appreciate the argument, and when we have the full power and authority in the next Parliament I shall certainly agree. That is one of the things on which we shall fight the election. I am glad that hon. Members understand that. There will not be any concealment, because we believe that in order to create the extra 1 million jobs necessary to solve our real problems, we must have planning on a much bigger scale.
If we tell the country that we will agree to the measures necessary for the planning of incomes and wages only when we have secured planning in all other fields, we shall never achieve that end, because we shall never be able to make the transition from here to there.

Mr. Mikardo: I know that my right hon. Friend would not intentionally misquote me. I must remind him that at no time have I or any of my friends said that wages can be planned when we have planned everything else. We have said and do say that we can concurrently have a planned wages sector when the rest is being planned. We cannot pick it out and have a planned wages sector in an otherwise unplanned economy.

Mr. Foot: I agree that we should move in that direction at the same time. In many fields that is what we have been doing. We have pressed regional policy more strongly than we ever did before.


We have sought to sustain our major industries—the motor industry, the steel industry and many more—with more direct Government action than we have ever had before. In all those fields there has been planning on a much more ambitious scale than ever before.
My hon. Friend the Member for Putney put this well when he said that it was happening in many other countries. It is happening in many of those paraded by Opposition Members as a model. These are countries which, in many cases, have beaten us on some of the questions of development of an industrial system. The argument on these issues that we have had in this country, this House and the Labour Party over the weeks and months can bear important fruition for Britain as a whole.
I believe that if we examine the incomes policy and turn it this way and that, we shall be forced back to the general proposition that we can only run it on a voluntary basis—

Mr. Adley: Can we join in the argument?

Mr. Foot: The hon. Member will have to think up something to say first. He had his opportunity during the afternoon. He is now seeing the real debate.

Mr. David Steel: The Leader of the House is asking us to accept as a great virtue the fact that an intense debate has gone on in the Labour Party. We do not deny that that is a good thing. We are complaining about the fact that the Government lost the argument.

Mr. Foot: The right hon. Member has not followed it exactly. The first argument that we have not lost is the one that he started and the one to which he adheres—the full panoply of the statutory policy. For all the reasons that I have sought to describe, and all the experience that we have had over the past 10 years, I say that that should be ruled out altogether. This Government have ruled it out. But we must search for a

Division No. 28]
AYES
[10.0 p.m.


Abse, Leo
Atkinson, Norman (H'gey, Tott'ham)
Bidwell, Sydney


Allaun, Frank
Bagier, Gordon A. T.
Bishop, Rt Hon Edward


Anderson, Donald
Barnett, Guy (Greenwich)
Blenkinsop, Arthur


Archer, Rt Hon Peter
Barnett, Rt Hon Joel (Heywood)
Boardman, H.


Armstrong, Ernest
Bates, Alf
Booth, Rt Hon Albert


Ashley, Jack
Bean, R. E.
Boothroyd, Miss Betty


Ashton, Joe
Benn, Rt Hon Anthony Wedgwood
Bottomley, Rt Hon Arthur


Atkins, Ponald (Preston N)
Bennett, Andrew (Stockport N)
Boyden, James (Bish Auck)

different way of doing it and I believe that the only way this can be done is by persuasion and consent. This involves arguments and discussions.

The Conservatives put a pistol to the heads of the trade unions and told them that they had to agree. Of course that did not work. They had a great challenge on the question who governed Britain. That was not the issue at all. The miners were engaged in a perfectly legitimate, constitutional action but the Opposition told them they were not entitled to do it. We had to come in and save the country.

In some respects the appalling industrial relations situation with which we were left in 1974, bad as it was, was the easiest problem that the Tories left. They also left us the biggest deficit in our balance of payments—[HON. MEMBERS: "Oh."]—The Opposition do not want to hear about that. They are not interested in the deficit on the balance of payments, but we had to spend our first year in office overcoming it. We thought that the deficit left behind by the previous Conservative Government in 1964 was bad enough. That left by the Leader of the Opposition and the right hon. Member for Sidcup (Mr. Heath), when they were still talking, was 10 times worse.

We had to deal with that and also with the worst inflation for years. I remember it well. [HON. MEMBERS: "What about the 8·4 per cent? "] The only thing that the hon. parrots on the Tory Benches can say is "8·4 per cent." They have not advanced beyond October 1974. The rate of inflation that they left us was appalling.

I believe that the vote of confidence will be carried tonight by a thumping majority, and when it is we shall come back after the next election—at a time chosen by the Prime Minister—with an even bigger majority.

Question put:—

The House divided: Ayes 300, Noes 290.

Bradley, Tom
Graham, Ted
Morris, Rt Hon Charles R.


Bray, Dr Jeremy
Grant, George (Morpeth)
Morris, Rt Hon J. (Aberavon)


Broughton, Sir Alfred
Grant, John (Islington C)
Morton, George


Brown, Hugh D. (Provan)
Grocott, Bruce
Moyle, Rt Hon Roland


Brown, Robert C. (Newcastle W)
Hamilton, W. W. (Central Fife)
Mulley, Rt Hon Frederick


Brown, Ronald (Hackney S)
Hardy, Peter
Murray, Rt Hon Ronald King


Buchan, Norman
Harrison, Rt Hon Walter
Newens, Stanley


Buchanan, Richard
Hart, Rt Hon Judith
Noble, Mike


Butler, Mrs Joyce (Wood Green)
Hattersley, Rt Hon Roy
Oakes, Gordon


Callaghan, Rt Hon J. (Cardiff SE)
Hayman, Mrs Helene
Ogden, Eric


Callaghan, Jim (Middleton &amp; P)
Healey, Rt Hon Denis
O'Halloran, Michael


Campbell, Ian
Heffer, Eric S.
Orbach, Maurice


Canavan, Dennis
Home Robertson, John
Orme, Rt Hon Stanley


Cant, R. B.
Hooley, Frank
Owen, Rt Hon Dr David


Carmichael, Neil
Horam, John
Padley, Walter


Carter, Ray
Howell, Rt Hon Denis (B'ham, Sm H)
Palmer, Arthur


Carter-Jones, Lewis
Howells, Geraint (Cardigan)
Park, George


Cartwright, John
Hoyle, Doug (Nelson)
Parker, John


Castle, Rt Hon Barbara
Huckfield, Les
Parry, Robert


Cocks, Rt Hon Michael (Bristol S)
Hughes, Rt Hon C. (Anglesey)
Pavitt, Laurie


Cohen, Stanley
Hughes, Mark (Durham)
Pendry, Tom


Colquhoun, Ms Maureen
Hughes, Robert (Aberdeen N)
Perry, Ernest


Concannon, Rt Hon John
Hughes, Roy (Newport)
Phipps, Dr Colin


Conlan, Bernard
Hunter, Adam
Prescott, John


Cook, Robin F. (Edin C)
Irving, Rt Hon S. (Dartford)
Price, C. (Lewisham W)


Corbett, Robin
Jackson, Colin (Brighouse)
Price, William (Rugby)


Cowans, Harry
Jackson, Miss Margaret (Lincoln)
Radice, Giles


Cox, Thomas (Tooting)
Janner, Greville
Rees, Rt Hon Merlyn (Leeds S)


Craigen, Jim (Maryhill)
Jay, Rt Hon Douglas
Richardson, Miss Jo


Crawshaw, Richard
Jeger, Mrs Lena
Roberts, Albert (Normanton)


Cronin, John
Jenkins, Hugh (Putney)
Roberts, Gwilym (Cannock)


Crowther, Stan (Rotherham)
John, Brynmor
Robertson, George (Hamilton)


Cryer, Bob
Johnson, James (Hull West)
Robertson, John (Paisley)


Cunningham, G. (Islington S)
Johnson, Walter (Derby S)
Robinson, Geoffrey


Cunningham, Dr J (Whiteh)
Jones, Alec (Rhondda)
Rodgers, George (Chorley)


Dalyell, Tarn
Jones, Barry (East Flint)
Rodgers, Rt Hon William (Stockton)


Davidson, Arthur
Jones, Dan (Burnley)
Rooker, J. W.


Davies, Bryan (Enfield N)
Judd, Frank
Roper, John


Davies, Rt Hon Denzil
Kaufman, Rt Hon Gerald
Rose, Paul B.


Davies, Ifor (Gower)
Kelley, Richard
Ross, Rt Hon W. (Kilmarnock)


Davis, Clinton (Hackney C)
Kerr, Russell
Rowlands, Ted


Deakins, Eric
Kilroy-Silk, Robert
Ryman, John


Dean, Joseph (Leeds West)
Kinnock, Neil
Sandelson, Neville


de Freitas, Rt Hon Sir Geoffrey
Lamborn, Harry
Sedgemore, Brian


Dell, Rt Hon Edmund
Lamond, James
Selby, Harry


Dempsey, James
Latham, Arthur (Paddington)
Shaw, Arnold (ilford South)


Dewar, Donald
Leadbitter, Ted
Sheldon, Rt Hon Robert


Doig, Petor
Lee, John
Shore, Rt Hon Peter


Dormand, J. D.
Lestor, Miss Joan (Eton &amp; Slough)
Short, Mrs Renée (Wolv NE)


Douglas-Mann, Bruce
Lever, Rt Hon Harold
Silkin, Rt Hon John (Deplford)


Duffy, A. E. P.
Lewis, Arthur (Newham N)
Silkin, Rt Hon S. C. (Dulwich)


Dunn, James A.
Lewis, Ron (Carlisle)
Sillars, James


Dunnett, Jack
Litterick, Tom
Silverman, Julius


Dunwoody, Mrs Gwyneth
Lofthouse, Geoffrey
Skinner, Dennis


Eadie, Alex
Lomas, Kenneth
Smith, Rt Hon John (N Lanarkshire)


Edge, Geoff
Loyden, Eddie
Snape, Peter


Edwards, Robert (Wolv SE)
Luard, Evan
Spearing, Nigel


Ellis, John (Brigg &amp; Scun)
Lyon, Alexander (York)
Spriggs, Leslie


Ellis, Tom (Wrexham)
Lyons, Edward (Bradford W)
Stallard, A. W.


English, Michael
Mabon, Rt Hon Dr J. Dickson
Stewart, Rt Hon M. (Fulham)


Ennals, Rt Hon David
McElhone, Frank
Stoddart, David


Evans, Fred (Caerphilly)
MacFarquhar, Roderick
Stott, Roger


Evans, Gwynfor (Carmarthen)
McGuire, Michael (Ince)
Strang, Gavin


Evans, loan (Aberdare)
McKay, Alan (Penistone)
Strauss, Rt Hon G. R.


Evans, John (Newton)
MacKenzie, Rt Hon Gregor
Summerskill, Hon Dr Shirley


Ewing, Harry (Stirling)
Maclennan, Robert
Swain, Thomas


Faulds, Andrew
McMillan, Tom (Glasgow C)
Taylor, Mrs Ann (Eolton W)


Fernyhough, Rt Hon E.
McNamara, Kevin
Thomas, Dafyod (Menoneth)


Fitch, Alan (Wigan)
Madden, Max
Thomas, Jeffrey (Abertillery)


Flannery, Martin
Magee, Bryan
Thomas, Mike (Newcastle E)


Fletcher, L. R. (llkeston)
Mahon, Simon
Thomas, Ron (Bristol NW)


Foot, Rt Hon Michael
Mallalleu, J. P. W.
Thorne, Stan (Preston South)


Ford, Ben
Marks, Kenneth
Tierney, Sydney


Forrester, John
Marshall, Dr Edmund (Goole)
Tilley, John


Fowler, Gerald (The Wrekin)
Marshall, Jim (Leicester S)
Tinn, James


Fraser, John (Lambeth, N'w'd)
Mason, Rt Hon Roy
Tomlinson, John


Freeson, Rt Hon Reginald
Maynard, Miss Joan
Tomney, Frank


Garrett, John (Norwich S)
Meacher, Michael
Torney, Tom


Garrett, W. E. (Wallsend)
Mellish, Rt Hon Robert
Tuck, Raphael


George, Bruce
Mikardo, Ian
Urwin, T. W.


Gilbert, Rt Hon Dr John
Millan, Rt Hon Bruce
Varley, Rt Hon Eric G.


Ginsburg, David
Mitchell, Austin (Grimsby)
Wainwright, Edwin (Dearne V)


Golding, John
Mitchell, R. C. (Soton, ltchen)
Walker, Harold (Doncaster)


Gould, Bryan
Moonman, Eric
Walker, Terry (Kingswood)


Gourlay, Harry
Morris, Alfred (Wythenshawe)
Ward, Michael 







Watkins, David
Willey, Rt Hon Frederick
Woodall, Alec


Watkinson, John
Williams, Rt Hon Alan (Swansea W)
Wool, Robert


Weetch, Ken
Williams, Alan Lee (Hornch'ch)
Wrigglesworth, Ian


Weitzman, David
Williams, Rt Hon Shirley (Hertford)
Young, David (Bolton E)


Wellbeloved, James
Williams, Sir Thomas (Warrington)



White, Frank R. (Bury)
Wilson, Rt Hon Sir Harold (Huyton)
TELLERS FOR THE AYES


White, James (Pollok)
Wilson, William (Coventry SE)
Mr. James Hamilton and


Whitehead, Phillip
Wise, Mrs Audrey
Mr. Donald Coleman.


Whitlock, William






NOES


Adley, Robert
Fisher, Sir Nigel
Kitson, Sir Timothy


Aitken, Jonathan
Fletcher, Alex (Edinburgh N)
Knight, Mrs Jill


Alison, Michael
Fletcher-Cooke, Charles
Knox, David


Amery, Rt Hon Julian
Forman, Nigel
Lamont, Norman


Arnold, Tom
Fowler, Norman (Sutton C'f'd)
Latham, Michael (Melton)


Atkins, Rt Hon H. (Spelthorne)
Fox, Marcus
Lawson, Nigel


Atkinson, David (B 'mouth, East)
Fraser, Rt Hon H. (Stafford &amp; St)
Lewis, Kenneth (Rutland)


Awdry, Daniel
Freud, Clement
Lloyd, Ian


Bain, Mrs Margaret
Fry, Peter
Loveridge, John


Baker, Kenneth
Galbraith, Hon T. G. D.
Luce, Richard


Banks, Robert
Gardiner, George (Reigate)
McAdden, Sir Stephen


Beith, A. J.
Gardner, Edward (S Fylde)
MacCormick, lain


Bell, Ronald
Gilmour, Rt Hon Sir Ian (Chesham)
McCrindle, Robert


Bendall, Vivian
Gilmour, Sir John (East Fife)
Macfarlane, Neil


Bennett, Sir Frederic (Torbay)
Glyn, Dr Alan
MacGregor, John


Bennett, Dr Reginald (Fareham)
Godber, Rt Hon Joseph
MacKay, Andrew (Stechford)


Benyon, W.
Goodhart, Philip
Macmlllan, Rt Hon M. (Farnham)


Berry, Hon Anthony
Goodhew, Victor
McNair-Wilson, M. (Newbury)


Biffen, John
Goodlad, Alastair
McNair-Wilson, P. (New forest)


Biggs-Davison, John
Gorst, John
Madel, David


Blaker, Peter
Gower, Sir Raymond (Barry)
Marshall, Michael (Arundel)


Body, Richard
Grant, Anthony (Harrow C)
Marten, Neil


Boscawen, Hon Robert
Gray, Hamish
Mates, Michael


Bottomley, Peter
Grieve, Percy
Mather, Carol


Bowden, (Brighton, Kemptown)
Griffiths, Eldon
Maude, Angus


Boyson, Dr Rhodes (Brent)
Grimond, Rt Hon J.
Maudling, Rt Hon Reginald


Bradford, Rev Robert
Grist, Ian
Mawby, Ray


Braine, Sir Bernard
Grylls, Michael
Maxwell-Hyslop, Robin


Brittan, Leon
Hall-Davis, A. G. F.
Mayhew, Patrick


Brocklebank-Fowler, C.
Hamilton, Archibald (Epsom S Ewell)
Meyer, Sir Anthony 


Brooke, Hon Peter
Hamilton, Michael (Salisbury)
Miller, Hal (Bromsgrove)


Brotherton, Michael
Hampson Dr Keith
Mills, peter


Brown, Sir Edward (Bath)
Hannam John
Miscampbell, Norman


Bryan, Sir Paul
Harrison, Col Sir Harwood (Eye)
Mitchell, David (Basingstoke)


Buchanan-Smith, Alick
Harvie Anderson, Rt Hon Miss
Moate, Roger


Buck, Antony
Haselhurst, Alan
Monro, Hector


Budgen, Nick
Hastings, Stephen
Montgomery, Fergus


Bulmer, Esmond
Havers, Rt Hon Sir Michael
Moore, John (Croydon C)


Burden, F. A.
Hawkins, Paul
More, Jasper (Ludlow)


Butler, Adam (Bosworth)
Hayhoe, Barney
Morgan, Geraint


Carlisle, Mark
Heath, Rt Hon Edward
Morgan-Giles, Rear-Admiral


Chalker, Mrs Lynda
Henderson, Douglas
Morris, Michael (Northampton S)


Channon, Paul
Heseltine, Michael
Morrison, Hon Charles (Devizes)


Churchill, W. S.

Morrison, Hon Peter (Chester)


Clark, Alan (Plymouth, Sutton)
Hicks, Robert
Mudd David


Clarke, Kenneth (Rushcliffe)
Higgins, Terence L.
Neave, Airey


Clegg, Walter
Hodgson, Robin
Nelson, Anthony


Cockcroft, John
Holland, Philip
Neubert, Michael


Cooke, Robert (Bristol W)
Hooson, Emlyn
Newton, Tony


Cods John
Hordern, Peter
Normanton, Tom


Cormack, Patrick
Howe, Rt Hon Sir Geoffrey
Not), John


Corrie, John
Howell, David (Guildford)
Onslow, Cranley


Costain, A. P.
Howell, Ralph (North Norfolk)
Oppenheim, Mrs Sally


Crawford, Douglas
Hunt, David (Wirral)
Osborn, John


Critchley, Julian
Hunt, John (Ravensbourne)
Page, John (Harrow West)


Crouch, David
Hurd, Douglas
Page, Rt Hon R. Graham (Crosby


Crowder, F. P.
Hutchison, Michael Clark
Page, Richard (Workington)


Dean, Paul (N Somerset)
Irving, Charles (Cheltenham)
Paisley, Rev Ian


Dodsworth, Geoffrey
James, David
Pardoe, John


Douglas-Hamilton, Lord James
Jenkin, Rt Hon P. (Wanst'd&amp;W'df'd)
Parkinson, Cecil


Drayson, Burnaby
Jessel, Toby
Pattie, Geoffrey


du Cann, Rt Hon Edward
Johnson Smith, G. (E Grinstead)
Penhaligon, David


Durant, Tony
Johnston, Russell (Inverness)
Percival, Ian


Dykes, Hugh
Jones, Arthur (Daventry)
Peyton, Rt Hon John


Eden, Rt Hon Sir John
Jopling, Michael
Pink, R. Bonner


Edwards, Nicholas (Pembroke)
Joseph, Rt Hon Sir Keith
Prentice, Rt Hon Reg


Emery, Peter
Kaberry, Sir Donald
Price, David (Eastleigh)


Ewing, Mrs Winifred (Moray)
Kellett-Bowman, Mrs Elaine
Prior, Rt Hon James


Eyre, Reginald
Kershaw, Anthony
Pym, Rt Hon Francis


Fairbairn, Nicholas
Kilfedder, James
Raison, Timothy


Fairgrieve, Russell
Kimball, Marcus
Rees, Peter (Dover &amp; Deal)


Farr, John
King, Evelyn (South Dorset)
Rees-Davies, W. R.


Fell, Anthony
King, Tom (Bridgwater)
Renton, Rt Hon Sir D. (Hunts)

Renton, Tim (Mid-Sussex)
Smith, Timothy John (Ashfield)
van Straubenzee, W. R.


Rhodes James, R.
Speed, Keith
Vaughan, Dr Gerard


Rhys Williams, Sir Brandon
Spence, John
Viggers, Peter


Ridley, Hon Nicholas
Spicer, Jim (W Dorset)
Wainwright, Richard (Coine V)


Ridsdale, Julian
Spicer, Michael (S Worcester)
Wakeham, John


Rifkind, Malcolm
Sproat, lain
Walker, Rt Hon P. (Worcester)


Rippon, Rt Hon Geoffrey
Stainton, Keith
Walker-Smith, Rt Hon Sir Derek


Roberts, Wyn (Conway)
Stanbrook, Ivor
Wall, Patrick


Rodgers, Sir John (Sevenoaks)
Stanley, John
Walters, Dennis


Ross, Stephen (Isle of Wight)
Steel, Rt Hon David
Warren, Kenneth


Royle, Sir Anthony
Steen, Anthony (Wavertree)
Weatherill, Bernard


Sainsbury, Tim
Stewart, Rt Hon Donald
Wells, John


St. John-Stevas, Norman
Stewart, Ian (Hitchin)
Welsh, Andrew


Scott, Nicholas
Stokes, John
Whitelaw, Rt Hon William


Scott-Hopkins, James
Stradling, Thomas J.
Whitney, Raymond


Shaw, Giles (Pudsey)
Tapsell, Peter
Wiggin, Jerry


Shaw, Michael (Scarborough)
Taylor. R. (Croydon NW)
Wilson, Gordon (Dundee E)


Shelton, William (Streatham)
Taylor, Teddy (Cathcart)
Winterton, Nicholas


Shepherd, Colin
Tebbit, Norman
Wood, Rt Hon Richard


Shersby, Michael
Temple-Morris, Peter
Young, Sir G. (Ealing, Acton)


Silvester, Fred
Thatcher, RI Hon Margaret
Younger, Hon George


Sims, Roger
Thomas, Rt Hon P. (Hendon S)



Sinclair, Sir George
Thompson, George
TELLERS FOR THE NOES:


Skeet, T. H. H.
Townsend, Cyril D.
Mr. Spencer Le Marchant and


Smith, Cyril (Rochdale)
Trotter, Neville
Mr. Michael Roberts.


Smith, Dudley (Warwick)




Question accordingly agreed to


Resolved,


That this House expresses its confidence in Her Majesty's Government and in its determination to strengthen the national economy, control inflation, reduce unemployment and secure social justice.

RATE SUPPORT GRANT

10.21 p.m.

The Secretary of State for the Environment (Mr. Peter Shore): I beg to move,

That the Rate Support Grant Order 1978, a copy of which was laid before this House on 29th November, he approved.

With this I understand that we are to discuss the three additional motions,

That the Rate Support Grant (Increase) Order 1978, a copy of which was laid before this House on 29th November, be approved.

That the Rate Support Grant (Increase) (No. 2) Order 1978, a copy of which was laid before this House on 29th November, be approved.

That the Rate Support Grant (Scotland) Order 1978, a copy of which was laid before this House on 1st December, be approved.

I understand that my right hon. Friend the Secretary of State for Scotland hopes to catch your eye, Mr. Speaker, in order to deal with the order that relates to Scotland.

After the events of the day and the lateness of the hour, my instinct and wish are to make an abbreviated speech, but such is the importance, not to say the complexity, of the rate support grant order that I simply have to give it a fair exposition. I hope that the House will bear with me.

I find this year's rate support grant settlement somewhat easier than last year's and considerably easier than the one before—and so of course does local government. This basically reflects the continued improvement in the economic situation—most notably in the past 12 months when GDP has increased by 3–4 per cent. and unemployment has fallen by over 100,000, while public expenditure is broadly in line with expectations and the public sector borrowing requirement is within target.

Against this background I am able to pursue four main objectives. The first is a modest growth in the essential services that local authorities provide for the community. Secondly, we wish to continue to identify the areas of need and to direct resources to them. Thirdly, we must maintain a reasonable stability and continuity in local government finance. Fourthly, we must introduce a major and overdue reform—the pay-

ment of needs element direct to district councils in the shire counties. I shall say more about this later.

I want to turn to the orders themselves. The main order relates to the RSG settlement for 1979–80. The increase orders relate to 1977–78 and 1978–79 respectively. I shall deal first with the increase orders.

The first of the increase orders essentially tidies up the 1977–78 settlement. That settlement was originally determined at November 1976 prices and was updated last year to take account of changes in costs since then. As the House will recall, that increase order did not exhaust the cash limits as they then stood. The cash limit on rate support grant, however, had to be revised downwards to take account of changes in the variable items and now stands at an amount below the amount of grant already approved by this House. That being so, the Government do not propose to make any further increase in rate support grant or national parks supplementary grants. The order now before the House simply increases transport supplementary grant by a further £2·4 million.

Mr. Michael Alison: The right hon. Gentleman said that there would be no further increase, but what will be the position if the manual workers settle at 5 per cent., but if the agreement is dated from this November? Will the extra cost of that be taken into account in further increase orders?

Mr. Shore: The hon. Member is not listening with his usual attention. I am talking about the rate support grant increase order for 1977–78. That is behind us, and I am therefore dealing with a historical matter, not a hypothetical event which may occur in this coming year.
As the House will appreciate, the breach of cash limits that has occurred is purely technical and is in no way the fault of local authorities. But, obviously, it is important to avoid a repetition. The Government will therefore be discussing with the local authority associations how we should modify our procedures.
I turn now to 1978–79. The settlement for that year, approved by the House last December, was at November 1977 prices and now needs to be updated to take account of changes in local


authority costs. The cash limit on rate support grant has been adjusted to take account of the decision not to increase the school meal charge, the national insurance surcharge, and the police and firemen's pay settlements. It has been abated to take account of the chief executives' and related groups' pay awards. Adjustments have also been made to take account of the variable items. The effect of all these changes is that the cash limit has now been increased by £92 million and now stands at £541 million. For transport supplementary grant the cash limit has been adjusted in respect of the national insurance surcharge and now stands at £22·1 million. Grant at 61 per cent. on the grant increases on local authority costs and full reimbursement on school meal charges will not exhaust the cash limit on rate support grant, though the limit on transport supplementary grant and national parks supplementary grant will be exhausted.
The increase order will accordingly increase rate support grant by £534 million, transport supplementary grant by £22·1 million and national parks supplementary grant by £300,000. The Government have carefully reviewed the cash limit on grant in 1978–79 but do not propose to make any further adjustments except for the variable items which are principally loan charges.
I now turn to the main Rate Support Grant Order for 1979–80—the meat and substance of today's debate. First I shall deal with expenditure. I am proposing a level of relevant expenditure of £14,109 million. This figure is at November 1978 prices and will need to be updated in due course in the usual way. It accords with the Government's expenditure plans. It includes current expenditure of £12,036 million. This is 1·6 per cent. above the level of expenditure which we have estimated authorities are undertaking in 1978–79; therefore the settlement provides for local authority expenditure to grow broadly at the same rate as public expenditure as a whole. This is obviously helpful to local authorities. More important, improved services will benefit the public and there will be some small increase in employment. Certainly the period of national manpower cuts in local government is over.
I propose to hold the grant at 61 per cent. for the third year. This will, of course, assist to provide a substantial measure of stability and continuity in local government finance. Related to this are the decisions on domestic rate relief which will again be held at 18½p in the pound in England and 36p in the pound in Wales. The ratio of resources element to the needs element will also be maintained at 32½ per cent. to 67½ per cent. I have received no representations against these two proposals. I have also taken the advice of the local authority associations and set the national standard rateable value at £175.
The amount of grant provided in these orders must be looked at together with the cash limits for 1979–80. These reflect the Government's pay and anti-inflation policies and assume that pay settlements in this round will be made in accordance with our pay policy and the forecast general rate of inflation based upon it. These are equivalent to a year-on-year inflation rate affecting local authority current expenditure of about 7½ per cent.
The cash limit on rate support grant will be £417 million, the limit on transport supplementary grant £25·9 million, and the limit on national parks supplementary grant £3 million. Specific grants are not, of course, cash limited.
As in previous years, the cash limit on rate support grant will be adjusted for the effects of certain variations in costs which are particularly uncertain. These are loan charges and certain elements in the housing revenue account which affect the rate fund contribution.
The cash limits will also, as in previous years, be reviewed if new legislation is enacted or brought into operation, or if changes are made in Government policy which entail changes in local authority expenditure. The Government would also be prepared to review the position in the light of all the circumstances of the time if the pace of pay and price increases generally or of those which affect local authority expenditure were substantially higher, taken as a whole, than those implied in the cash limits.
In considering pay settlements which are in accordance with the pay policy, our objective in the past has been to achieve the fair balance between what


costs should be borne by the ratepayer and what by the taxpayer: hence our action in respect of the police and firemen's settlement. That objective will continue to be pursued.
In formulating my proposals for the settlement I have inevitably considered the national average domestic rate increase with which it is compatible. I have looked at our previous record in forecasting 15 per cent. for 1977–78, single figures for 1978–79 and again at the actual outturn of 14·9 per cent. and 9·7 per cent. I am tempted, in the light of this extraordinary result, to try for precision again. But I confess to the House that many variables have contributed to the outturn in ways that I had not estimated and so the result has a rather spurious accuracy.

Mr. Dudley Smith: The Secretary of State has constantly talked, in advance of this debate, about single figures. Is he aware that the vast majority of the counties will have very large double figures?

Mr. Shore: No, I am not aware of that. I am aware that year after year treasurers in the counties and elsewhere take one look at the rate support grant settlement and say "Oh, God, it's going to be 20 per cent. or more." I would advise the hon. Gentleman and, indeed, all hon. Members to compare what their treasurers and senior officials have said in the past with the actual rate struck several months later when calmer thoughts have prevailed and more mature consideration has been given.
I must emphasise that it is not the Government who decide rate increases: it is the individual local authorities. They must allow for the amount of grant which they will receive, the level of expenditure which they think it right to undertake, their expectations as to inflation, and the amount which they are prepared to draw from balances. It is not a simple question.

Mr. Ron Thomas: My right hon. Friend refers to the level of expenditure which it is felt it is right to make. Many district councils, such as Bristol, have rightly had a number of responsibilities placed upon them, but this House has not provided them with the financial resources needed to support those responsibilities.

Mr. Shore: I shall be coming to a change that could be of some relevance for great cities and districts such as Bristol. That concerns the direct payment of needs element to them in respect of their services. I hope that my hon. Friend will be patient when I say that I shall reach this issue later in my speech.
I am coming to a conclusion in the matters I have just put before the House. I have decided to be more tentative in my forecasts this time. I say to the House, as I said to the consultative council, that it would be unwelcome indeed if average domestic rate increases—I have to talk in averages—were significantly greater than the rate of inflation, which the Government are determined to keep within single figures.
After the debates of today and yesterday, I need hardly remind the House of the grave implications for growth and employment in the economy as a whole if inflation were allowed to take off. I must assume, therefore, that local authorities will act with their accustomed responsibility to help us bring about this result. This means that they will have to think hard before rating for contingency allowances for inflation above the assumptions made in the cash limits. It means also that they would be prepared to hold down rate increases by planning to draw down from balances in the way that they planned to do this year. I shall simply conclude by saying that the settlement on these assumptions is compatible with the national average domestic rate increase remaining in single figures.

Mr. Eldon Griffiths: Will the right hon. Gentleman accept that some counties are baffled by the basis on which he has reached some of his decisions? Will he go this far, and accept that, where there is genuine bewilderment, there may be a case for him or his Minister of State receiving deputations from those county councils, with their Members of Parliament, if only to explain what has happened?

Mr. Shore: That is a fair and reasonable suggestion. A number of the changes that we propose in the orders are not easy for all local government officials to absorb. We deal directly with the local authority associations, and that


is not the same as dealing with all the town clerks and chief executives. I should be very willing, as I have been in the past, to see deputations and groups with my colleagues wherever that is reasonable and helpful. This year we are introducing this change between the counties and the shire districts, so I understand that there is a special need for explanation.

Mrs. Elaine Kellett-Bowman: Mrs. Elaine Kellett-Bowman (Lancaster) rose—

Mr. Shore: If the hon. Lady will forgive me, I might be able to help the House if I turn now to distribution—a subject which I know whets the appetites and sharpens the knives and the wits of all right hon. and hon. Members. So let me begin by saying that I am able to reassure the House that the distribution of needs element will once again be based on a regression analysis of local authorities' expenditure; I am continuing to follow the wise course charted by the right hon. and learned Member for Hex-ham (Mr. Rippon). I wanted to quote him, but I shall refrain from doing so because I cannot see him in the House. He had a favourite phrase about "picking up the cards" that he found lying on his table when he became a Minister. I am merely picking up the cards that he has left behind in the Department of the Environment.
The case for using regression analysis has been somewhat strengthened this year, both by a practical demonstration of the lack of political bias in this method of distribution—[HON. MEMBERS: "Oh."]— and by an extensive and fruitless search for alternatives.
First, let me deal with the question of bias—and I hope that the House will listen to what I have to say.

Mrs. Kellett-Bowman: It has no substance.

Mr. Shore: If the hon. Lady will contain herself for a moment, she might consider whether my argument has any substance. But she cannot judge that until she has heard me.
In the past, it has been possible to argue—however unjustly—that it was only possible to maintain the system of distribution based on regression analysis be-

cause the predominantly Labour local authority associations representing the urban areas—the AMA, the LBA and the GLC—were willing to lend it their support against the views and advice of the predominantly Conservative associations, the ACC and the ADC. But if this were the case we would have expected since May, when all the associations passed into Conservative control—the AMA and LBA as well—to see a massive and united campaign developed by the associations to put an end to regression analysis. Not so. Despite the changes in political control, the urban associations—the Conservative-dominated AMA, the LBA and the GLC —still favoured the use of regression analysis as against other possibilities available. Whatever the reasons for disagreement about regression analysis might be, it is no longer possible to claim that it is a party political issue. It reflects genuine differences in judgment and of interest.
The grants working party, which includes Government and local authority officials, undertook, with my strong encouragement, an exhaustive search this year for alternative methods, not involving regression analysis, of making objective assessments of authorities' expenditure needs. It has drawn a blank. I confess that this was not unexpected, although I am, as always, open-minded about improvements to the needs assessment methods. I believe that that is true of everyone who is serious about this. Regression analysis is still the best known and best established of the relatively few statistical techniques available. It would have been surprising if another candidate with better claims had emerged, in spite of all our searches.
What many of the critics of the system object to, some of them consciously, some of them without fully realising the implications of their argument, is not the method of assessing needs by regression analysis but the whole principle of basing the grant distribution on assessed expenditure needs. I am not prepared to accept that we should distribute needs grant on any basis other than the best possible objective assessment of expenditure needs. Without such objective assessments, needs element would be pointless. We should have no way of knowing that the grant was distributed according to need, and authorities' entitlements would have to be based at best on unprovable


value judgments or at worst on the pork barrel or the lottery.

Mr. Percy Grieve: Does not this basis for the grant mean that the spendthrift authority does best while the most economical authority does worst?

Mr. Shore: That is a familiar criticism of the method of regression analysis based upon actual expenditure of local authorities. I understand the criticism but do not take the point that, if the actual expenditure of authorities is looked at across the country as a whole, we can see that we are simply reflecting the whims and caprices of a few spendthrift authorities. We are taking the aggregate expenditure of local government. Unless we are to say that the whole of local government is irresponsible, I do not believe that such criticism can stand up.

Mr. Reginald Eyre: The right hon. Gentleman should not delude himself into thinking that he had dealt fairly with areas of need. Coventry, Dudley, Sandwell, Walsall—all of these have lost out, as have Calderdale and Kirk lees in West Yorkshire, Stockport and Trafford in Greater Manchester. So have Knowsley on Merseyside and Sheffield in South Yorkshire. This shows that there is something seriously wrong with the system.

Mr. Shore: The hon. Gentleman has failed to make the point that the city of Birmingham, with all of its problems, has not lost out. The city of Liverpool has not lost out. I could give a roll call far more impressive than that of the hon. Gentleman in terms of actual measured expenditure need. I shall take up his point in a moment.

Mr. Robert Hughes: I appreciate the importance of the point my right hon. Friend is making. It is of great interest to English local authorities. Will he take into account the fact that we have a short debate of four hours, and allow for the fact that there is great interest in this issue in Scotland, too?

Mr. Speaker: Order. I was going to make an appeal. I know that there are over 40 hon. Members who are hoping to participate in this four-hour debate.

They will all have to be extremely brief if their wish is to be fulfilled.

Mr. Shore: I take your point, Mr. Speaker. I accept the implied rebuke of my hon. Friend the Member for Aberdeen, North (Mr. Hughes). I must ask the House to be a little more indulgent towards me. I know how the House loves to debate the rate support grant order. As the House knows, I am generally equally willing to give way. However, we are circumscribed tonight. I wish to proceed as I have some important points to make that may cover many of the questions of hon. Members.
I accept that a regression-based distribution formula of general application will not necessarily pick up the special circumstances of every individual authority. I readily accept that some of the data could be better. I am seeking ways of improving them. I accept, too, that there are problems of intelligibility with a complicated system of assessment. However, all these difficulties would apply to any system which seriously set out to measure expenditure needs. They would not apply with anything like the same force to the ACC simple system. However, that is not a needs-assessment system. It is a device for securing whatever distribution it is wished to achieve by means of arbitary judgments based on the choice of needs factors and their weight.
Setting aside these weighty technical considerations, let us consider the results of the 1979–80 settlement against some broad criteria. The detailed results are not controllable. That would be incompatible with using a form of general application. However, by and large, considering the overall pattern, the overall results of the distribution allow me to claim that the settlement is fair and reasonable. Thanks in part to the £95 million real increase in the needs element, it has been possible to continue concentrating resources in the areas with the most pressing social and economic problems without putting undue pressure on other authorities.
Help to the inner cities continues. All the partnership authorities gain on average by the equivalent of a 1·7p rate. All the programme authorities, except, unhappily, Sheffield, gain. The average gain for them is 1·4p. At the same time it has


been possible to ease the effects for the more prosperous areas by extending damping to five years and by using a 2p safety net. Overall, of the 116 London boroughs, shire counties and metropolitan districts, only a quarter will lose. As a result of the safety net, none of them will lose more in real terms than the equivalent of a 2p rate, subject to what I say about needs element payment to the districts and the shire counties.
In 1979–80, London's position, like that of all other authorities, will reflect changes in its assessed expenditure needs. It is not being singled out for special treatment. The 1979–80 needs assessment implies that London should get a real £41 million increase in needs element by comparison with 1978–79. The clawback of London's needs element for the benefit of other authorities is being adjusted to achieve that result. That does little more than consolidate the recent real improvement in London's relative position; and any complainers that London still does too well would do well to remember that average London rate bills are still £40, or 31 per cent., higher than elsewhere.
But, given this, I have had to make a change from earlier years in not being able to accept the advice of the London Boroughs Association on the London rate equalisation scheme. I have thought it necessary to alter the balance of the scheme in favour of the inner London boroughs. The aim of the rate equalisation scheme is to ensure that rate burdens across London are broadly comparable. This is a separate principle from the one on which the main needs element distribution is based—though the scheme is largely incorporated in the RSG order—and recognises that there are respects in which it is right to think of the conurbation as a whole, even though it is made up of many separate authorities.
A recent study—which I suspect many hon. Members on each side of the House have noticed—by the North-East London polytechnic, which received some publicity in the middle of last month, suggested that the RSG arrangements had worked to the benefit of the suburban areas rather than the inner areas of our cities. This is emphatically not true of the national needs element distribution as it affects either our major provincial

cities or London itself, but there is an element of truth in it so far as the effects of the London rate equalisation scheme are concerned. By mixing up the national needs element distribution and the London rate equalisation scheme, this study has somewhat muddied the waters.
It was, in fact, the effects of the rate equalisation scheme—and not, as he supposed, the national needs element distribution arrangements—that the hon. Member for Barkston Ash (Mr. Alison) had in mind when he referred in his speech of 27th October to the favourable treatment accorded to the
 lush outer boroughs of London ".
I could not, of course, go along with all that he said on that occasion, but on this one issue at least he was not wholly wide of the mark.
In the past three years, the equalisation scheme has worked in such a way that outer London's rate burdens have gone up very much more slowly than those of inner London—by 7 per cent. as against 30 per cent. I am, therefore, setting the London rate equalisation arrangements for 1979–80 so as to go some way towards restoring the balance. As a result, £28½ million of London's real gain in grant of £41 million will go to inner London and £12½ million to outer London.

Mr. Ronald Brown: May I say to my right hon. Friend that we still resent that each year London is losing in real terms hundreds of millions of pounds to which it is entitled, even on his own analysis? It is quite wrong that we keep having this money taken away from us to be redistributed in other areas of the country where people pay far less in rates.

Mr. Shore: I well understand the sentiments that underlie that authentic voice of London which we have just heard. I think my hon. Friend will recognise, however, that the settlement is still helpful to London, although admittedly not as helpful as the settlements we have been able to make in the past.
I turn now to the major innovation for 1979–80—the payment of needs element to the non-metropolitan districts. Up to now, districts have not been compensated for the need to incur higher than average expenditure on their own services. The burden of financing higher


expenditure needs has therefore fallen entirely on the ratepayers of the districts where they arise and has resulted in significantly higher rate poundages. In some shire counties the rate on district services in the more urban areas is over twice as high as in other areas. For example, in Leicestershire, Leicester's rates for district services, at 18p, are 9p higher than those of Rutland, all within the same county.
It would obviously be unfair to allow this to drag on. The 1974 Act made provision for direct payment of needs element to non-metropolitan districts, the Layfield committee recommended that we should make the change, and the Association of District Councils—notwithstanding a certain amount of opposition from the Association of County Councils—unanimously favoured direct payment of needs element to the districts. I am, therefore, taking advantage of the relatively favourable situation this year to put an end to this long-standing inequity.
The method of implementing the change, which is supported by the ADC, as well as the principle, is designed to keep changes in the distribution of rate burdens within a county within tolerable limits. Broadly, ratepayers in the more urban areas with more pressing social and economic problems, and high rate pound-ages, will gain and other districts will lose. But the losses will be limited by, first, distributing three-quarters of the grant wholly on the basis of population and, secondly, by applying a second 2p safety net—separately from the national arrangements—so that the effects of the redistribution of rate burdens within a county do not lead to losses in excess of 2p.
I should like to emphasise that the purpose of this change is to encourage a fairer pattern of rate burdens, not to affect the provision of services. Shire counties will, of course, need to make a once-and-for-all increase in their precepts to compensate them for their loss in needs element. No blame should attach itself to them for that. But I also expect the advantage of the new needs element allocations to the districts to be fully passed on to their ratepayers. The balance between higher county precepts and the new entitlement to needs element will vary between districts. But, overall, in every county the effect should be neutral,

with losses for some districts balanced by gains for districts with higher needs and higher rates.
To sum up, this year's settlement is a carefully judged easement and improvement for local government generally. It is a reinforcement of priorities in needs assessment, and brings about a rectification of a major anomaly and injustice. I know that the settlement is generally acceptable to local government, and I believe that it will be to the House.

[0.56 p.m.

Mr. Michael Heseltine: As the Government quite clearly understand in Cmnd. 7049, the rate support grant has to be seen in the context of their overall economic strategy. As the Secretary of State fairly repeated in his speech, they have there put forward the broad purposes of that strategy as containing inflation, reducing unemployment and promoting industrial efficiency. But I do not believe that the rate support grant settlement which the right hon. Gentleman has introduced is compatible with any one of those three objectives.
First, there is the objective of containing inflation. In that case, the rate increases should not stimulate wage claims over and above what the level of the Government's forecasts are claimed to be. Secondly, the rate support should be at a level which does not lead to large public sector borrowing. Thirdly, it should be seen to be fair across the country at large. Those are the three conditions that I believe to be necessary if it is not to have an effect upon inflationary pressures.
I first take the effect of the rate support grant on Government policy as expressed in the 5 per cent. wage target. The rate increases are an average, as the Secretary of State pointed out. In his White Paper he talked of just under double-figure inflation—presumably between 7 per cent. and 9 per cent. But the first fallacy of a rate support grant in line with the target of a 7 per cent. to 9 per cent. national inflation rate and a pay policy of 5 per cent. is that he is dealing with averages. The effects of the rate support grant are very different in different parts of the country.
Secondly, the component of rate support grant increases in the increased cost of living, which we must take into account when judging the Government's


overall policy, will be very much higher than the single-figure inflationary pressures about which the Secretary of State is talking, because rates have to be paid out of net income. In order to encompass rate increases of the order of 7 per cent. to 9 per cent., someone will have to earn at a standard tax rate of about an extra 13 per cent., and to increase one's earnings by 13 per cent. is in no way compatible with a 5 per cent. increase in wages, such as the Government have suggested.
The third fallacy is that the whole basis of the Secretary of State's argument is that the average of rate increases will be within the figures that he has put forward. But the reality is that those who are negotiating the wage claims will not ask what the average increase in rates has been; they will ask what their increase in rates has been.
As dotted around all over the country there will be areas where rate increases are way beyond the average figures mentioned by the Secretary of State, those higher levels will be built into wage claims, which will be substantially over 5 per cent. In some areas there will be rate increases of about 20 per cent. and they will be quoted when negotiators put in for higher wages. That is not compatible with the Government's concept of a 5 per cent. ceiling. In those three considerations, the rate support grant will stimulate inflationary pressures over the 5 per cent. that the Government have in mind.
The grant is also bound to be inflationary because it is part of a pattern of public spending that includes a public sector borrowing requirement on a scale which the Government should not have introduced and which the economy patently cannot afford. The levels of public sector borrowing are on a scale that will undoubtedly help to maintain interest rates at the present crisis levels and makes them incompatible with the Government's third objective of improving industrial efficiency. As long as interest rates are at present levels, the Government will not get the investment they require and productivity will not increase. The rate support grant is part of a package that maintains an economic climate that is incompatible with industrial improvement.

Mr. Shore: Is the hon. Gentleman telling the House that either the percentage level of the grant is too high and should be lower than 65 per cent., or that he believes that the level of total local government expenditure for which we have allowed is too high? If that is so, what does he propose to cut?

Mr. Heseltine: The Government should not have budgeted for the sort of increase in local government expenditure that is built into the plans before the House. I would unhesitatingly be prepared to list specific area after area where reductions in local government public expenditure could take place, although I realise that in doing so I should be extending my speech and I know that many hon. Members wish to speak. However, if Labour Members are willing to forgo their time in the debate, I shall discuss lower public expenditure.

Mr. Stanley Newens: It is extremely important for the House that the hon. Member should make clear the services that he advocates should be cut in all local authority areas so that we may be clear about the policy of the Conservatives. Many of my hon. Friends wish to take part in the debate, but I am sure that they will be grateful if he will list those items. Contrary to what some of the hon. Gentleman's hon. Friends are saying, he believes that the rate support grant is too high.

Mr. Heseltine: I shall list many of the areas where there could be reductions and I shall do so with all the enthusiasm with which the hon. Gentleman voted for cuts in those areas when his Government were forced to introduce them only a couple of years ago.

Mr. Newens: The hon. Gentleman has got it wrong.

Mr. Heseltine: The hon. Gentleman had better start consulting the voting records before he discusses cuts in public expenditure. At times, this Government have been been forced to introduce cuts in public expenditure in local government on a scale that no other Government have been forced to match. They were not criticised for doing so from this side of the House.

Mr. Martin Flannery: The hon. Gentleman and his hon. Friends wanted bigger cuts.

Mr. Heseltine: The Government would not be criticised if they had introduced the cuts that we believe to be necessary now.

Hon. Members: Which services should be cut?

Mr. Deputy Speaker (Sir Myer Galpem): Order. I must appeal to the House to give a hearing to each hon. Member who takes part in the debate.
May I say at this early stage that, although we have four hours to debate the rate support grant for England, Wales and Scotland, hon. Members will have to restrict their speeches if we are to get everyone into the debate?
It seems from the list of those wishing to speak that practically the whole population wants to take part. I ask hon. Members to try to restrain themselves as far as possible.
Also at this early stage, perhaps I may say that there is a difficulty confronting the Chair. As the Scottish order is separate, on which the Secretary of State for Scotland hopes to intervene, during my occupancy of the Chair I shall try to arrange a play within a play, and perhaps a few Scottish Members will get rid of the Scottish order and then the English and Welsh Members can have the whole of the rest of the time to themselves.

Mr. Heseltine: The third criticism of the rate support—[HON. MEMBERS:" What about the cuts? "] It is coming, but I should like to deal with the matter in sequence in my speech rather than going ahead and then coming back.
My third criticism of the rate support grant arises because patently this is not regarded in local government terms as a fair settlement. I would be the first to say that there are those local authorities that do well. But, quite clearly, to judge from all the representations that had been made to hon. Members on both sides of the House, there are, equally, authorities that have done extremely badly. The only conclusion that one can draw from that is that the decisions made by the Secretary of State are, this year, as they have been in earlier years, arbitrary. They are arbitrary with one purpose in mind. That is to shift resources from the shire counties to the urban areas. That he has done in a consistent pattern year after

year after year, quite regardless of any genuine and objective measurement of the real problems of the growth areas, which are largely to be found in the shire county areas.
Whilst I am the first—as I have said many times from the Dispatch Box—to agree that there are genuine and real problems in the urban areas, my own deeply held conviction is that the Secretary of State is not helping to solve those problems by merely pouring more and more public money into the areas where in so many cases it is an overreliance on public money and public authorities that has actually created many of the problems in the first place.
This year that shift has continued. But, in addition to that shift, the Secretary of State, in moving part of the needs element direct to the districts, and in the method by which he has done that, has actually continued the drift of accentuating resources on the urban areas as opposed to the county areas. I believe that this is a practice not based upon an objective assessment of the sort that would remove a great deal of the heat and controversy from the annual RSG settlement.
Perhaps not all hon. Members have had the opportunity—indeed, the privilege—which I have had of consulting the factors that the Secretary of State takes into account. They are to be found listed in schedule F of the White Paper "Local Authority Finance ", which actually accompanies the whole introduction of the RSG. There is a list here of all the factors that are introduced year after year. If these factors were broadly the same, or if they reflected the reality of the logical extension of the economic trends as they were going, one could understand that there was a consistency. But what the Secretary of State actually does is to reach a conclusion and then instruct his civil servants to go on feeding factor after factor into the calculation until they come out with the conclusion that is exactly what he told them to find.
Perhaps the House will bear with me. One can just take these factors and look at what has been done by this Secretary of State and this Government in choosing which factors in which particular year. There are about 20 factors. There are things such as persons to the acre, acres


to the person, housing starts, elderly people living alone, persons lacking basic amenities in their homes, overcrowding, single-parent families, unemployment, schoolchildren, and all those sorts of things—exactly what one would expect to find. Then, every year, one can see whether those factors were included.
Perhaps I may take just two factors to show the House what actually happens year by year. I take, first, housing starts. One would understand that that is a legitimate method of understanding what the pressures are in each particular area. How can any objective assessment lead to the following particular set of decisions over five years? When there were housing starts of 124,000, this factor was not included. Housing starts rose to 154,000, and it was included. They remained roughly the same, 156,000, the next year, and it was not included. They went down to where they had been before, and it was not included. Then they slumped to 84,000, and it was included again. By what conceivable objective standard can one justify that?
Next, perhaps we might consider the Government's one area of great success—unemployment. In 1974, we had 2·7 per cent. unemployment, and the factor was not even tested. In 1975, after 18 months of Labour Government, the figure had leapt to 4·9 per cent., and the factor was not even tested. The following year, another year of Labour Government, saw unemployment up to 5·8 per cent., and it was not only tested but included. In the following year, it was up again to 6·4 per cent, but it was not tested and not included. In the following year, unemployment was still 6 per cent., and it was included.
What conceivable objective test is that, other than the one test that the Secretary of State, like an organ player, just pulled the stops in and out to reach the fundamental decision which he bad made before the calculation even started?

Mr. Flannery: I come from Sheffield, and I am deeply worried about this, as my right hon. Friend knows. Will the hon. Member for Henley (Mr. Heseltine) please tell us the cuts which he would make? He has promised to do so. His hon. Friends do not want him to do so. They are terrified that he will.

Mr. Heseltine: The hon. Member is only forestalling the eager moment when I reach the point in my speech where I give those details.
I am concerned that the Secretary of State should not be able to produce any rational explanation of how these factors go in and out. I believe that the only way to achieve an objective understanding of what goes on is for all these factors to be considered by a Select Committee in the process of reaching the rate support grant in the first place. But that is a decision that the Secretary of State will not be able to make next year. We shall have to consider it ourselves.
But by no stretch of the imagination can the Secretary of State say that the system is fair, because no one can explain away the factors that I have put before the House.
The rate support grant has become an annual piece of chicanery. It has become a series of political manipulations at the whim of the Secretary of State for the Environment. Anyone who thinks that the rates bill, which has soared under this Government, has anything to do with the reorganisation of local government in 1973, which is the old, weary accusation, ought to look at one other set of figures which my hon. Friend the Member for Northampton, South (Mr. Morris) happened to get from the Secretary of State.
Between 1974 and 1977, the number of employees in local government, largely under Conservative control, increased by 4·6 per cent. The wages bill of local authorities, upon which rates effectively are based, increased in those four years by 66·7 per cent. That is why rates have soared, and it is due to the economic mismanagement of this Government and in no way because of the reorganisation of local government in 1973.
I now deal with the question put to me very fairly by Government supporters. There is a fundamental difference between the two sides of the House about it. The Opposition believe that the critical need today is to get resources into productive manufacturing industry and into the wealth-creating sectors of the economy. That must result in some areas having to forgo expansion, and, if the words of the Prime Minister about getting Britain back on to a sound basis mean


anything at all, they must mean placing less reliance on the growth of public spending of the sort that the Secretary of State loves so dearly.
I give seven example of areas where I think there could be a change of approach. The first concerns the use of regression analysis. In local government today, regression analysis means that the more that is spent, the more that will be got next year. I can think of no incentive to any management team in the world less likely to result in a cut in costs than to tell it that the more that it cuts, the less it will get next year, and the less that other people cut, the more they will get as a consequence. That is what regression analysis means, and it is not right or relevant in the present economic climate.
Let us carry that to the practical realities. We find officials in the regional offices of the Department of the Environment ringing up local authorities towards the end of the year asking whether any schemes are available to keep the budgets up. They know that if the budgets are cut one year, they will never get the money back the next. That is the attitude which underlies the rate support grant.
Secondly, there should be a different approach to the realisation of assets presently hoarded in the public sector. By that I mean local authority land, land in new town centres, council house sales, and all areas where the public sector can contribute to the solving of the national economic crisis.
Next comes the repeal of the Community Land Act and the reduction of development land tax which is having a dramatic effect—

The Minister for Housing and Construction (Mr. Reginald Freeson): That has nothing to do with RSG.

Mr. Heseltine: The right hon. Gentleman gives the game away when he says that it has nothing to do with RSG. I shall tell him what it has to do with RSG. If only the development of our cities could proceed, there would be a larger rateable basis and a wider spread upon which rates could be levied. It is because the Community Land Act is preventing that that it must go at the earliest opportunity.
The next area for improvement is directly within the responsibility of the Secretary of State. If he would spend more time running his Department and taking decisions, emptying the filing trays which are full of pending applications—a whole range of one sort or another from local government—representing decisions on what it wants to do but which are being held up by the great bureaucracies of Whitehall, additional jobs would be created in the towns concerned.
Next, central Government would have a bonfire of the detailed controls they have over local government, controls which absorb innumerable people in the checking process and which by the very delay they imply mean that the country operates more slowly than it should and impose an overhead cost on manufacturing industry.
The final improvement would be equally important in speeding up the momentum of local government and reducing its cost. The right hon. Gentleman should not now be giving local government the impression that another major reorganisation is coming along, with all the diversion of management expertise that this implies, when he knows that it is an electoral stunt and that no legislation will come before the House in this Parliament. He is hoping to pick up a few votes, regardless of the effect on local government objectives and morale.
So in all these ways there is a discretion in the hands of the Secretary of State which could be used to counter the national economic crisis but which is not used because of the right hon. Gentleman's preoccupation with other matters. It would be a major reason to praise him if he continued the process over which he once presided, which is to try to contain the levels of local authority expenditure. This year the rate support grant has given a wholly spurious impression that the crisis is over and that the old upward spiral can once again get under way. We reject that concept and therefore we shall vote against the order tonight.

11.19 p.m.

Mr. John Cartwright: I remember that the feature of last year's debate on rate support grant was a prolonged and orchestrated attack upon my right hon. Friend's treatment of Greater London. The attack was stimulated by


the fact that my right hon. Friend had begun harshly to correct a long-standing injustice in the treatment of Greater London under the grant.
The same sort of reactions are becoming evident in this debate. The Opposition seem to suggest that the whole calculation of RSG is a politically motivated exercise—" chicanery" was the word used by the hon. Member for Henley (Mr. Heseltine). I find that hard to understand, because, like other hon. Members, I have received a number of briefs from local authority associations on the settlement.
I have received one from the Association of Metropolitan Authorities, which is Conservative controlled. It does not lay that charge against my right hon. Friend. It is broadly satisfied with the settlement. I have had one from the London Boroughs Association, which, again, is Conservative controlled. It does not make the charge, either. Finally, I have heard from the Greater London Council, which is also Conservative controlled. I find this last brief a little unusual.

Mr. Evelyn King: The hon. Gentleman has quoted almost every association, but he has totally omitted the Association of County Councils, of which Dorset and all the other shire counties are members. Those counties have the greatest grievance of all, and the most justifiable grievance.

Mr. Cartwright: I knew that I was unwise to give way before I had finished developing the argument. I was coming on to the county councils' position.
If it is really the case of Conservative Members that this is a politically motivated settlement to benefit the Labour Party, it is surprising that three major local authority bodies, all Conservative-controlled, do not make that charge. I find the brief from the Greater London Council particularly interesting. It is not the usual official GLC brief but a personal brief, which comes from Richard M. Brew, member of the GLC for Chingford, deputy leader of the council and leader of the policy and resources committee. He says:
 Criticism is likely to be expressed of the alleged poor treatment of the shire counties under the rate support grant settlements of

the last five years and a settlement urged which is more favourable to the shires in 1979–80.
My Council is particularly concerned that London's position under the RSG system should not be misunderstood and has prepared the attached paper which I hope will be of use to you.
I found the paper of considerable use. I am surprised to see a rather small number of Conservative hon. Members from Greater London taking advantage of it.
The basic case made in the document is that which a number of us have made over the years—that London has never received its fair share of the needs element of the rate support grant—[Horn. MEMBERS: "Oh."] If hon. Members look at the calculations they will see that under the terms of the regression analysis London has never had the sums which that analysis proved it needed to meet its needs.

Mr. Grieve: I can understand the hon. Gentleman's support for the Government's distribution of the needs element this year. Is it not right that in his constituency of Greenwich each ratepayer will benefit as a result to the tune of £27 a year?

Mr. Cartwright: My constituency is not Greenwich ; it is Woolwich, East. Within the Woolwich borough there will certainly be an improvement this year, partly as a result of the RSG settlement but largely as a result of the alterations in the proposed London equalisation scheme.
The reason why London does not receive its fair share, as calculated under the terms of the regression analysis, is the operation of what used to be called claw-back but is now rather delicately described as the "London resources adjustment ". The case for denying London its fair share is that London has high rateable values, that it has high rateable resources because of the rateable values in the city. That means that Londoners have to make higher rate payments and that they are hit twice. First, they pay higher rates than those charged in the rest of the country. Secondly, because they have higher rates to pay, they receive less Government help through the rate support grant.
The London Boroughs Association has produced some calculations which show that rates paid in London on a standard house in 1978–79 will work out at £204. The rates paid on that standard house in


the rest of England and Wales will average out at £141. So there is a tremendous gap there on the same sort of property between what is paid in London and what is paid outside London. That dubious advantage of £63 in actual rates paid is the reason for denying London the share of the rate support grant which it should have.
The Greater London Council has done some similar calculations. It takes the average annual domestic rate bill paid in Greater London, which for the current year is £169. For the shire counties in England it is £127, for the shire counties in Wales it is £76, and for the metropolitan counties it is £115. Over the whole of the rest of England and Wales it is £120. So on that calculation Londoners again are paying substantially more in rates than is being paid in the rest of the country.
The argument which some hon. Members advance in support of that state of affairs is that London has a much higher average income per head and therefore we can afford to pay higher rates in London. There is, of course, some truth in that. [HON. MEMBERS: "Some? "] Yes, there is some truth, but those hon. Members who try to paint a picture of every London street paved with gold are also trying similarly to paint a picture of all Londoners as company directors, polytechnic lecturers or computer programmers, when manifestly they are not. There are a great many Londoners who are unskilled. One of our problems in the city has been the departure of industry and, in particular, the departure of skilled workers. As my hon. Friends who represent London constituencies will agree, we have a great many unskilled workers in service and similar trades in which rates of pay are certainly not as high as are paid in other parts of the country.
Again, the GLC's calculations show that London's average post-tax income, on the latest available figures, was 13 per cent. higher than in the rest of the country averaged out, but, to take the shire counties which are complaining, London's average post-tax income is lower than in Hertfordshire, Berkshire or Buckinghamshire. That to some extent sets in perspective the argument about wealthy Londoners who can afford to pay these higher rates.
The impact of clawback last year was £270 million. That was £270 million which Londoners forwent in respect of rate support grant. This year, a further £70 million will be added in clawback, so the total sum Londoners will not receive is £340 million. On the other hand, as my right hon. Friend said, there will be an increase in the needs allocation, so that London will get an extra £41 million in real terms, which means that London's share of rate support grant in the total settlement will go up from roughly 21·6 per cent. to just over 22 per cent. But it is not likely—I think that everyone accepts this—to narrow the gap between rate bills paid in London and those paid in the rest of the country, because London needs those extra resources to meet the problems with which it is now grappling.
For one thing, rateable values are falling in London because of the departure of industry. I challenge any hon. Member to deny that the industrial decline has been much sharper and more catastrophic in London than it has in any other part of the country. Second, rateable values are declining because of the revaluation of commercial properties, which were originally valued at the peak of the property boom in the middle 1970s.
Moreover, many of the social problems we face in London are of a more marked character and on a much larger scale than they are in other parts of the country. The problems of urban decay, homelessness, crime and vandalism, deprivation and inner urban problems generally apply in many other parts of the country, but I believe that many hon. Member will accept that, on all the straightforward comparisons, those problems are a great deal worse in London than they are elsewhere in the country.
I should have thought that the House of Commons, having passed the Inner Urban Areas Act and said that it wanted to see greater resources directed towards the inner urban areas to tackle those problems, would agree that the rate support grant ought to be balanced in such a way that there was a particular sum going to meet such problems in the inner urban areas, and in Greater London in particular.
I come now to the London equalisation scheme. The Secretary of State, as he


said, has altered the recommendation made by the London Boroughs Association. I think that it is the first time that this has ever occurred. The LBA understandably feels somewhat aggrieved that its recommendations have been interfered with. I understand the difficulties that exist in trying to get agreement among 32 London boroughs, particularly inner boroughs and outer boroughs. As a former chief whip of the LBA, I know the problems involved in that process.
Nevertheless, I think that many of us have been puzzled and somewhat dismayed by recent equalisation schemes which have seen boroughs like Tower Hamlets, Hackney and Islington paying out resources across to boroughs like Richmond, Kingston and Barnet, which, on any assessment, do not need additional resources. In that sense, I much welcome what my right hon. Friend has done in reweighting the equalisation scheme so that it benefits inner London rather more that the LBA's recommendations would have done.
May I briefly say a word about the regression analysis? [HON. MEMBERS: "No."] Well, other hon. Members have mentioned it and I think it only fair that I should say something, and it will be very quickly. I accept that the regression analysis formula is not simple, but it seems to me that it is the only objective measurement of need based on past spending patterns. All the efforts that have been made over the years by local authorities and the Government to come up with a viable alternative have not succeeded. I notice that no one on the Opposition Benches has so far tonight suggested a workable alternative.
The Association of County Councils' system—the so-called simple system—is certainly not simple and it is not fair. It is based on subjective judgment which is bound to lead to disputes; it is based on an idea of what ought to be local government spending, and that, in my view, is a total attack on local government autonomy.

Mr. Geoffrey Johnson Smith: The hon. Gentleman says that no one has come up with an agreeable alternative. Frankly, some of us are fed up with the existing system. We believe that we have made sufficient criticism to

ask the Government—they have had plenty of time—to come up with something better. I give a specific example, East Sussex—indeed, Sussex as a whole. Some people, amusingly at times, but it tells a fact, refer to the south coast of Sussex, or parts of it, as the "Costa Geriatrica" of England. Under the regression analysis, so far as East Sussex is concerned, the number of people in retirement living alone—

Mr. Deputy Speaker: Order. I hope that hon. Members are not going to use interventions for the purpose of making speeches. If each Member does that, an intervention will get nowhere during this debate.

Mr. Johnson Smith: I apologise, Mr. Deputy Speaker. May I put this to the hon. Member for Woolwich, East (Mr. Cartwright)? The fact that the number of people living alone no longer features as part of the regression analysis makes people in Sussex pretty sick with this formula.

Mr. Cartwright: I agree that one can make individual criticisms of the regression analysis. I have done it myself when I was in local government, and I am sure that it is possible to do it now. What I am saying is that local government itself, and local government in partnership with the Government, has not yet been able to come up with a system which would do the job better, and that is the basic objection.
I support strongly the recommendations being made by my right hon. Friend, even though there is no real improvement in the situation for London, even though there will be no narrowing of the gap between rate bills paid in London and those paid outside, and even though London ratepayers will still be surrendering £340 million to those elsewhere who are paying small rate bills. That point should be borne in mind by those who are complaining about the recommendations before the House.

11.38 p.m.

Mr. Hugh Fraser: I will be fairly brief. Although I had prepared a speech that could run for several hours, I propose to reduce it to magical proportions.
First, I must thank the Secretary of State on behalf, I believe, of all the


Staffordshire Members for having listened to some of our pleas and having increased our rate support grant by about £1 million. For that we are duly grateful.
I turn now to the speech of the hon. Member for Woolwich, East (Mr. Cartwright), just delivered over the last 15 or 16 minutes. The fact is that in terms of the rate support grant available to Staffordshire in 1974 we are now £11 million worse off, and that is why we reject and regret the general approach of the Government—indeed, of all past Governments—as this thing has piled up, running now into thousands of millions of pounds, a great deal of which is ill spent.
In Staffordshire we have, like everyone else, special problems, especially with the numbers of schoolchildren who are coming in under formula 4. We are not getting sufficient money and so forth. We have talked to the Secretary of State about this a number of times. I hope that some of these discussions can be kept private rather than that these local points should have to be made.
I want to make three main points tonight. I am sure that there is a movement equivalent to proposition 13 in the United States and that will grow and affect all Governments. The people are fed up with paying local property taxes. People feel passionately about these matters.
I come to the second point I wish to make to the right hon. Gentleman and to my right hon. Friends who will shortly inherit the high offices of running the Home Department, and so forth. I believe that the patching money which is transferred from the shire counties to try to patch up the real problems of urban squalor are not appropriate and that there must be a totally different approach. Decisions must be made about what is to be done in areas such as Liverpool. It should not be just a question of patching up from current expenditure. In Glasgow, for instance, major capital investment and reintegration are required. At present, money is being wasted. The money Staffordshire is paying out to Greenwich is wasted money.
Thirdly, we must recognise what has happened in the United States. We have seen what has happened with the funding of municipal authorities there. We in

Britain are not far off that problem today. Tonight the Secretary of State told the municipal authorities "You can keep your rates down if you are prepared to spend your balances." I hope that the Minister will tell the House tonight what is the level of municipal government indebtedness—in yearling bonds, in foreign borrowing. Local government balances should be devoted to reducing that debt and not to making up a subsidy to keep rates down elsewhere so that they are politicaly acceptable and the movement towards proposition 13 does not gain strength.
There is a grave danger that any Government nowadays will run into thousands of millions of pounds of local government expenditure, accompanied by untold borrowing, and then tell local authorities "Use your balances to keep the people quiet. Use the money you have saved to keep the pressure down "; and, before the Government know where they are, they will be bust, just as New York was nearly bust a few years ago.

11.38 p.m.

Ms Maureen Colquhoun: I suppose a debate such as this is bound to be fairly parochial. It is proper that Back Bench Members should support their constituencies. I totally support the Government's policy of diverting rate support grant to the inner city areas. I hope that this will come as a welcome surprise to him, because I am a representative of a shire county and of the borough of Northampton. I regard it as perfectly proper that the dereliction of our inner cities should have the special help that the Labour Government wish to provide for them.
Of all the files in my office since I became a Member of Parliament, the rate support grant one is the fattest. Of all the problems facing me as an individual constituency Member, the rate support grant, its formula, the needs element, the resources and the domestic element and the delegations arising out of these yearly battles have been ongoing. I take this opportunity of thanking my right hon. Friend for having so courteously and constantly received delegations from Northampton.
One of the abysmal features of the rate support grant is that it is a never-ending battle, similar to going out on


Boxing Day to buy next year's Christmas presents. Relentlessly, as soon as this year's grant is settled and the statutory orders are made, the representations appear to begin all over again for the following year.
The rate support grant tends to dominate the process of settling the local rate, and indeed the local rate is affected by the rate support grant. It is not surprising that this situation constantly happens. But this process, since its introduction in 1966, has become yearly more difficult to explain and to contain. It also creates greed in certain local authorities.
I can tell my right hon. Friend that the blame for rate increases and for cuts in student grants, nursery school and library facilities, and fire, police and social services is laid, especially by county councils which are Tory dominated, such as Northamptonshire, on the Labour Government. Although the Government's back is broad enough to contain this blame, it is unsatisfactory that political hypocrisy should emerge from a system that was fundamentally set up to give fair, effective and equitable help, shielding the ratepayer from the worst problems of the present rating system.
The Government act as a ratepayer to make up the local rate deficiency. However, not all the criticism is unjustified. It should be possible to fix the rate support grant for three or five years at a time. I believe that the Layfield committee recommended three years. Perhaps the Secretary of State can say whether he has given any thought to this proposal and whether it could be implemented.
Given the shortage of time, I shall not press my right hon. Friend radically to reform the rating system—a step which every ratepayer wants to see carried out—or to comment specifically on my constituency or the county of Northamptonshire, which has a long history of problems connected with the new town situation, but I remind him of Labour's programme for Britain 1973 which said:
 The needs criteria should be strengthened to ensure that the greatest assistance goes to the authorities which have the most pressing problems. When local authorities are required by law to provide new or extended services, for example, in the field of social services, for the elderly, disabled and chronically sick, central Government must will the

means of providing the necessary finance in exchequer grants.
Although I realise that the Government have committed additional support in the needs element from 60·7 per cent in 1976–77 to 79 per cent. in 1978–79, the resources element is down from 29·2 per cent. in 1976–77 to 19·7 per cent in 1978–79 and the domestic element from 10·1 per cent. in 1976–77 to 1·3 per cent. in 1978–79. In 1974, local authorities in England and Wales lost their responsibility for sewerage services and water supply. In Northampton's case, sensible local authority rate accounting is to be replaced by monstrous direct billing by the largely unaccountable and bureaucratic Anglian water authority.
Ratepayers in Northampton will face two rating bills, since there will be an additional one for water and sewerage. The prospect is dearer water, ultimately metered from supply. Every new house built in Northampton is threatened with a £1,000 charge for direct connection to sewerage. Each new baby born in Northampton is threatened with a bottled water supply.
This will be very costly, and I suggest that next year the Government should consider an additional element in the rate support grant—a water element. That is desperately needed if the people of Northampton are to pay their water bills. I ask my right hon. Friend in advance to receive at the double early in the new year a delegation from Northampton.

11.46 p.m.

Mr. Charles Morrison: The hon. Member for Northampton, North (Ms Colquhoun) wants a new element in the scheme. My right hon. Friend the Member for Stafford and Stone (Mr. Fraser) wants a completely new scheme. But the real trouble with the support grant stems from the fact that we have a bad Government. If we had a good Government, the economy would have expanded fast enough to ensure that, while public expenditure as a whole was cut as a proportion of the gross national product, the amount which could he given to local authorities could steadily grow. That is the cause of the trouble.
In his statement on the rate support grant on 24th November, the Secretary of State said:
 It would be unwelcome if domestic rate increases were significantly greater than the


rate of inflation, which we are determined to keep within single figures.
I have a great deal of sympathy with his intention, but how does he reconcile that statement with the prospect for my own county of Wiltshire? I make no apology for being insular or domestic.
To be fair to the Government, Wiltshire has some pluses. For example, last year the Government suggested 7 per cent. for inflation; the county rightly assumed that the Government were wrong, and budgeted for 8 per cent. This order now expects a rate of 9 per cent., so there is a gain for the county—but only because of its sensible budgeting.
But the pluses are nothing compared with the minuses this year. The rate support grant order reckons that the average rateable value this year will be £175, as opposed to the figure of £177 assumed by Wiltshire. Therefore, the amount by which the rate is made up by the resources element is that much less than expected and could be a very large sum.
Secondly—this is the most important fact—Wiltshire's share of the total rate support grant has dropped from 0·99 per cent. in 1974–75 to 0·77 per cent. in 1978–79 to 0·74 per cent. for 1979–80. In that period, the county's total loss was £20·5 million—even greater than the figure quoted by my right hon. Friend the Member for Stafford and Stone for his county. After a loss equivalent to at least 9½p in the £ in the current year, and a further loss for next year, how can the Secretary of State reconcile the position in Wiltshire with the quotation which I gave from his statement of 24th November? Worse still, how dare the right hon. Gentleman say:
 My message to local government today is certainly not one of retrenchment. It is one of modest growth in the provision of the vital services that local government provides to the community.
How can the right hon. Gentleman say that against the background of a steady loss of grant aid to the county of Wiltshire?
The current estimate by the county for next year's rate increase, excluding the transfer of needs element to districts, is between 18 per cent. and 20 per cent. What is more, the Secretary of State knows very well that in Wiltshire the only district which is likely to gain from the needs element transfer is the district of

Thamesdown. Part of that district falls within my constituency and I am glad that there is to be some benefit for it. But the whole of the other district of Kennet, which falls in my constituency, will suffer a disadvantage, as will the other district councils in the county.
The county of Wiltshire does not begrudge the increase in grant to London. Most people in my county would accept the arguments put by the Under-Secretary in support of an increase in grant aid to London. What people in my county begrudge is that, after five years of Socialist government, the county continues to have its grant cut in real terms while at the same time the Secretary of State mouths platitudes about modest growth and inflation. That is totally unacceptable to people in my county and that is why tonight I shall be joining my right hon. and hon. Friends in voting against the order.

11.52 p.m.

Mr. Stan Crowther: In view of the lack of time for debate I shall not attempt to examine in detail the argument we have just heard. I assure you, Mr. Deputy Speaker, that I am not about to be parochial. I have three points to make, one general and two rather more specific. The first that worries me is the concern over the form rather than the content of the subject we are debating. It is a matter for some concern that there is still no sign on the horizon that the Government are even looking seriously any longer at the urgent need for a drastic reform of the whole system of local government finance. It is a great pity that this is now apparently being dropped.
Many of us who were involved in local government at the time took the view that the biggest mistake that Parliament made in 1972—when I was not in this House—was to try to reorganise the structure of local government without at the same time—or even before—putting the financing right. The result is that we now have a financing system which is totally inadequate and inappropriate to carry the burden of what many of us feel is a cumbersome, bureaucratic, wasteful and top-heavy structure.
What is necessary is a more rational, simple and comprehensible system of


financing in local government. I suggest that it might even be in the interests of democracy if we had a system which consumers could understand. I realise that what I am saying will be thought to be revolutionary and will be regarded as out-outrageous by the experts, whose status would be diminished if the aura of mystery were swept away and we had a system which could be understood by the man in the street, the man in the council chamber and hon. Members. We do not spend a great deal of time in the pubs and clubs of Rotherham talking about regression analysis
My hon. Friend the Member for Woolwich, East (Mr. Cartwright) said that he felt that there was not a more acceptable system. There should be, and I am sure there is if we give the matter proper consideration. One of the basic problems of the present system is that the Government decide need. I admit that that is decided after protracted negotiations, but in the end the Government make their assessment of need. They dispense the money on the basis of their assessment and they leave it to the local authorities to please themselves whether they spend it in accordance with the need that the Government have assessed or whether they spend it at all. Some authorities merely use it to reduce the rates.
The former system of specific percentage grants meant that the authorities that were spending on services received assistance in the provision of those services That is no longer so. It is no longer true that the system benefits the so-called spendthrift authorities. Only by means of a specific grant can we ensure that the authority that makes a proper priority decision on where it needs to spend its resources will be grant-aided in proportion to what it is spending. That system, unfortunately, has long since been abolished. My hon. Friend the Member for Woolwich, East was in local government, as I was, 20 years ago. We fought strongly against the abolition of specific grants.
I am worried about pay increases. I appreciate that my right hon. Friend said what he had to say in the light of Government policy. He said that cash limits have been calculated so as to reflect the Government's pay and inflation policies. He developed his theme by saying that

it is the Government's assumption that pay settlements will be in accordance with pay policy. That is some assumption. My right hon. Friend is a realist. I do not think that he believes that local government manual workers, who include some of the worst paid employees in the country, will settle within 5 per cent. I am convinced that they will not.
My right hon. Friend said that there is provision for a review of cash limits. They will be reviewed with pay and price increases generally. A review is not the same as an assurance. I hope that before much longer my right hon. Friend will assure local authorities that if settlements are way beyond 5 per cent., or even slightly beyond, the Government will accept their proportionate share and pay the extra money. If he does not, either rate increases far beyond what he has forecast will be levied or significant cuts will take place in services and in manpower. The latter measures might be accepted in some quarters, but they would not in the town that I represent. I hope that we shall have an assurance along the lines that I have indicated.
If we are seriously to accept what my right hon. Friend the Chancellor of the Exchequer told my hon. Friend the Member for Chester-le-Street (Mr. Radice) on 15th November—that the Government are anxious to ensure that those in the public service receive comparable pay for comparable work—public sector comparability with the private sector will not allow settlements inside 5 per cent. That must be accepted.

12 midnight.

Mr. Stephen Ross: I should like to deal very quickly, Mr. Deputy Speaker, with the subject that we are discussing tonight, so that other hon. Members may be able to get into the debate.
I am sick to death of hearing pleas for London every time. Some of my constituents would very much like to have the free concessionary fares that are available in London. They would like to have the same standard of provision for the elderly. There are people from London who have come to live in my constituency and we know that the provision made by the GLC is far superior to that which is available to natives of the Isle of Wight.
If our rates are to go up by between 20 per cent. and 30 per cent., and if


the earnings in London are, as reported, 13 per cent. above those in the rest of the country, this year we shall probably be paying more in rates than people in London.
I do not disagree at all with the points made by the hon. Member for Henley (Mr. Heseltine) or about the cuts he suggested, but I wonder how he would propose to deal with the wage bill for local authorities. The way in which the chief officers received their recent rise was disgraceful, and it was quite right for the Government to impose an abatement in the rate support grant for that. It was a very bad example and will make things much more difficult. As one who was in local government when the reorganisation took place and the wage levels were fixed, I am afraid that we are on fixed scales now and it will be very difficult to get off them. That applies to those on both sides of the House, and I do not see how we are to deal with it.
The Secretary of State has now left the Chamber but he will not be surprised to learn that I am very disappointed with the settlement for my own constituency. I can assure him that there will be no more deputations coming to see him—he can feel relieved on that account—because we have proved our case. The Minister who is now on the Front Bench heard one of our deputations and we were very grateful to him for that. He will know that we proved our case to the Department of the Environment.
I accept that the Secretary of State went to the meeting of the local authority associations last July quite willing to feed in a special factor for the Isle of Wight. He was rebuffed by all the local authority associations, which are now all Conservative-controlled. Our case was referred to by the hon. Member for Henley in his speech here just a year ago, when he said that his party would favour some special treatment for the Isle of Wight. I can tell him we feel aggrieved that it was Conservative-controlled local authority associations that prevented it.
Now we are in real trouble because we do not have any real balances left. We have balances of only £200,000, and that is the product of a penny rate. To restore what we need there would have to be a 3p increase and a further 1 p to deal with

future commitments. Our ratepayers are now faced with about a 30 per cent. increase. This takes in the element that is going to the districts. It means that county rates are likely to go up from 72½p to 95½p.
Many hon. Members come to the Isle of Wight and they will know that our cultural and recreational facilities are fairly abysmal. Most people complain about the disgraceful state of Cowes during Cowes week—in particular, about the way we deal with drainage. We are behind and we need help. It is very sad that we have not been able to achieve something on this occasion, because we are trying.
The county council is not of my political persuasion but I give it credit for trying desperately to improve standards and to deal with the enormous backlog. It goes back many years and that is its inheritance. If we are to maintain services at anything like a respectable level —especially with our population going up every year, and expected to go up to 130,000 in the next 10 years—we have real problems.
A quarter of my constituents are retired people, and this factor will create additional problems in the years ahead, although I fully accept that most of them are well able to look after themselves. Nevertheless, when people are living longer, added problems arise.
The continuing absence of any special factor relating to our increased costs, which arise from a unique situation, that is, severance by sea, is indeed a cruel blow.
The regression analysis formula continues to produce erratic results, as anyone can see from the table which has been presented. The position has been made tolerable only by the fact that the damping has been extended a further year. We can see from the table that Hampshire is losing £5 million. How on earth is Hampshire to budget with that coming upon it? We can see also that Powys—the most sparsely populated area of the country—is in real trouble. It has put forward a very good case to the Department. I am speaking now on behalf of my hon. and learned Friend the Member for Montgomery (Mr. Hooson). I believe that Powys has a case which must be looked at.


The Secretary of State said that he hopes to get the local authority associations together in the new year to discuss problems such as that of the Isle of Wight and the sparsity factor in Powys and other counties in Wales. I very much hope that that meeting will take place and that the local authority associations will co-operate, because these are matters which need to be dealt with quickly.
This continual shift of resources away from the non-metropolitan counties presents a growing problem for such counties. It is time that authorities in the South of England pointed out to the Government that it is they who are facing most of the problems today. It is to the South and West of England where the population growth is going, not to the inner or outer boroughs of London. Yet these areas get none of the assistance which the development and intermediate areas receive.
We in the Isle of Wight want to do something for the tourist industry, yet we get none of the regional aid grants from the EEC or the Government, because we are not an approved development area. We do not even merit intermediate status. It really hurts me when I find that Aberdeen still qualifies for intermediate status.
It is in the South where a lot of these problems arise, particularly in housing the homeless and in the provision for the elderly. The new proposals to pay the needs element to the non-metropolitan districts will mean that those districts are bound to spend more. Under my Housing (Homeless Persons) Act the whole idea was that responsibility for the homeless would be moved from social services to housing, and that there would be no increase in expenditure. But that just did not happen. It will not happen this time, because the officials are only human beings. They will spend this bonus when it comes in, and the county councils will have to take the rap.
I hope that the provisional discussions will deal quickly with some of the problems in the counties which are worst affected by this settlement. I urge the Secretary of State to try to bring forward some further assistance as soon as possible rather than wait another year. In conclusion, I should like to know why the domestic element for Wales will still remain at 36p whereas in England it is

18½p. I thought that had to do with paying extra water rates, but these are now being equalised. Why is it that the domestic element in Wales remains so much higher?
After last year's legitimate protests, we Liberals confidently expected a rather fairer settlement this time. We have not got it. Therefore, the only weapon left to us is to vote against the order tonight.

12.8 a.m.

Mr. Jim Craigen: There may well be a case for having Select Committees on local government, because I do not believe that the House spends sufficient time on reviewing the role of local authorities and their financing. In fact, it is typical of local government in the United Kingdom that our Parliament, unlike many other Parliaments, seems to downgrade the status of local authorities within the governmental system. Yet Parliament is continually laying down laws which we expect the local authorities, as the basic public agencies, to execute. But at the same time we do not always examine the way in which the local authorities are financed or serviced in terms of staffing.
I want to direct my remarks to the Secretary of State for Scotland and to the Scottish order. As my right hon. Friend knows, a number of us made representations to him about the Glasgow position, and the fact that with the continuous decline in the city's population over the past 20 years Glasgow faces some severe financial problems. We welcome the extent to which the Government have moved on this matter by introducing a new factor into the needs element in the current calculations. We hope that this new factor, which should partly offset the impact of continuous population loss, will become an inbuilt factor in the needs element, and it seems essential to have some guarantee that the Glasgow predicament of steady population losses will be met.
I need hardly tell my right hon. Friend that the city's debt charges do not decline with the drop in population. Nor does the proportion of dependants in the city go down either because, although there may have been changes in the proportion of citizens under the age of 15, the city faces a decide in which the proportion of citizens over 65 will increase.
The Secreary of State will realise that the rating burden per head of population considerably affects the commercial and industrial structure of the city and its ability to retain and attract new industries, quite apart from the effects on civic life. We do not expect that the changes conceded by the Government on this occasion will achieve the desired results overnight, but we look for assurances about future calculations on the population factor.
What is the position on the employment of extra teachers in the Strathclyde region? The Secretary of State will be aware of the problem in some of our schools. We are grateful for the urban aid assistance and for the extra 500 teachers that my right hon. Friend provided in the areas of urban deprivation, but is the region making full use of the additional rate support grant which the Secretary of State has said that the authority receives?
My right hon. Friend will also be aware of the shortages of social workers in the region and the regional council's hopes of stepping up supply. The region has a low rate of car ownership and therefore a high dependency on public transport. Does the Secretary of State think that the additional money is ample to meet the needs of the Greater Glasgow transport executive in trying to minimise travel-to-work costs in the area?
The Secretary of State sent a circular to local authorities in October drawing attention to increases in expenditure that had taken place. In singling out leisure and recreational expenditure an item, which often comes at the bottom of the queue of priorities I hope my right hon. Friend will bear in mind that, at a time of high unemployment, it is important that there should be ample leisure and recreational provision in the area.
Scotland has the unique advantage of a single channel—the Convention of Scottish Local Authorities—to deal with the Secretary of State in rate support grant matters. That may make it easier for the Scottish Office, but whether it makes it easier for individual local authorities is another matter. It is essential that in this area of local government there should be greater openness and public awareness of the discussions that take place on the disbursement of local government

finances, because the recommendations of COSLA have a considerable impact on Scottish life and local government.

12.14 a.m.

Mr. Alick Buchanan-Smith: The tragedy of debates such as this is the very short time that we have to discuss important matters, and I make no apology to the Secretary of State for Scotland for dealing in the barest outline with the subjects on which I wish to comment. I should love to have time to say more, but that time is not available when so many other hon. Members wish to speak.
What is the effect of the Scottish order? The simple effect is gross discrimination against the rural areas of Scotland. Taking the Grampian region, part of which lies in my constituency, we see a loss of £2¾ million for that regional authority. My hon. Friend the Member for Aberdeen, South (Mr. Sproat) will bear me out on that.
But it is not a matter only of Grampian. and I am not speaking only for my area. Looking at Fife—a loss of £1·4 million—the Borders, Dumfries and Galloway, one sees that all these areas have been subjected to gross discrimination in the order. What are the beneficiaries? They are the urban areas of Scotland, particularly Strathclyde and Glasgow. I simply ask whether this is fair.
For Grampian, the E2¾ million loss of grant is almost exactly equal to the sum that the region receives in oil-related grant. Could anything be a more obvious example of the Government taking away with one hand what they give with another? It is that kind of hypocrisy that we face in the kind of RSG that the Government have put before us. It is most unfair, against not only Scottish rural areas but against an area such as Grampian, which is contributing more to the British economy—because of the activity there related to oil—than almost any other area in Great Britain. Shetland is perhaps the only comparable area. We are contributing to the survival of the British economy, yet through this RSG the Government take away with one hand what they return in the other hand and for which they try to take credit by pretending that they are giving in other ways.
The Tayside region, part of which is also in my constituency, is not treated quite so badly as Grampian, but the loss there represents about 0·8p in the rates. In the districts of Angus and of Kincardine and Deeside, it is exactly the same sort of thing.
What is behind this? That is what we really want to get at tonight, even in this short debate. Of course, the reason is that the Secretary of State has chosen to change the distribution formula. The effect of the change, as has been said, is to reduce the differences in expenditure net of grant. The result of that is simply that local authorities are less inclined to pursue economies in the costs of running services. Any saving that they make is likely to be eliminated in the subsequent review of grant formula.
Where we have a regional authority such as Grampian, Conservative-controlled with the lowest administrative costs of regional councils in Scotland per head of population, it is simply hammered because it runs it affairs rather more economically than other areas. That is one of the effects of the change in the distribution formula.
Secondly, the Secretary of State must realise that there is great concern among local authorities in Scotland. I understand that a working party of the Scottish Office is currently considering these matters and the basis on which expenditure should be considered in relation to grant. It is wrong of the Secretary of State to introduce this change in the formula when this working party is carrying out its work, because the basis for assessment of expenditure should be the needs for expenditure—there is fairness in that—and not on the actual expenditure.
Thirdly, the Secretary of State must also realise that when he makes these continual changes in the distribution formula, as he has at present, although he has to explain these changes in the House, it is the local authorities in Scotland, be they regional or district councils, which have to explain them to the ratepayer. The Secretary of State knows that there is concern about this among many local authorities. By constantly changing the formula, he is contributing to the undermining of the credibility of Scottish local authorities.
Again, the Secretary of State has to answer for the fact that by the time he lays the order, as he did, in December of this year, most local authorities, especially the larger authorities in the regions, have already completed their work in deciding what their rates should be. If the Secretary of State at this stage introduces changes in the formula for the distribution, he puts local authorities in great difficulty. Therefore, he really should announce in advance what he is doing so that local authorities are better able to plan and to serve their ratepayers.
I have dealt with the problems only in outline. But let the Secretary of State realise that what he proposes means either a reduction in services or an increase in rates. When that becomes apparent to the ratepayers, it is not the regional councils or the district councils which will stand condemned. It is the Labour Government, for their mismanagement of the economy.

12.20 a.m.

Mr. John Home Robertson: I am very pleased to be called immediately after the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith), because I know a certain amount about his constituency, having been its prospective Labour candidate until fairly recently.
The Scottish order is a slim little document which looks fairly insignificant but which is of paramount importance to all sorts of people all over Scotland. I was beginning to wonder what had happened to the SNP's representation in this House, but I notice that the hon. Member for South Angus (Mr. Welsh) has come scurrying in at the last minute.

Mr. Robert Hughes: A fleeting visit.

Mr. Home Robertson: Some of us have been here throughout this debate.
This is an interesting document. It says that the overall estimated aggregate amount of the rate support grant for Scotland is to be put up by about £130 million on the estimated figure for last year. That is tremendous. It represents an increase of about 34 per cent. However, when we look at the actual figure —because it was tinkered with last year —we find that the increase is £54 million, so we are back to the good old 5 per cent.


that we seem to talk about in this House night in and night out. But at least it is an increase in public expenditure and, as far as it goes, I welcome it. Whether it will mean any increase in real terms remains to be seen.
I have been in this House just long enough to have become inquisitive. I have begun to wonder what effect this document will have on the local authorities in my constituency and how each authority will fare under the weird formula for distributing the rate support grant which is described in about two-thirds of the order.
I wrote to the Scottish Office to try to get some answers about a week ago, and I make no complaint about not yet having had a reply, because I know that it will take time. I recalled that my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) told me when I first arrived here that the fount of all knowledge in this place was the Library. So I asked whether the Library could give me the carve-up of the rate support grant for the coming year. I received a letter from someone in the statistical section saying:
 I rang up the Scottish Office to see if they could give me comparable figures for the year 1979–80 but unfortunately they will be unable to do so until the local authorities have their rate poundages available in March next year and they have themselves obtained population estimates for June 1978.
This point about population estimates is quite interesting. Evidently last year, at the end of January when local authorities are supposed to "strike" their rates, as it is quaintly termed, the Registrar General for Scotland had not yet published the estimate of the population. So, when councils were fixing the rates last year, they did so without knowing what the rate would yield, and likewise I feel that we are fixing the rate support grant in this House without knowing what effect it will have on individual councils.
I persevered in my researches, and eventually I got in touch with the director of finance of the Borders regional council, who quoted a paper which had been produced by COSLA. That says that the estimated grant per head of the population for Scotland will increase by £1·16. That is all right. But it goes on to say that for the Borders region it will

be cut by £6·31 per head of the population. That represents a net loss of £400,000, which does not seem very much but which amounts to 2 per cent. of the total budget of this small rural region and would result in what the director of finance of the Borders estimated would be an increase of 1·3p on the rates.
Tonight in the Chamber one of my hon. Friends had a paper in his possession which had been circulated to certain Glasgow Members. It contained the information I have been seeking, and I resent other hon. Members being given information that I have been unable to secure. I find that the increase in rates will need to be about 1·41p in the Borders region. But the rates in the Borders region are already well above the Scottish average while the standard of our services is below average.
As far as I can make out, all will be well in the Lothian region, which includes the other half of my constituency. Seeing you in the Chair, Mr. Deputy Speaker, I may say that I am delighted that Glasgow and our inner city problem areas are to get more resources—

Mr. Deputy Speaker: Order. I want to assure the hon. Member that I had nothing whatever to do with that.

Mr. Home Robertson: I apologise, Mr. Deputy Speaker. I am delighted that our inner city areas will get extra resources, but it is monstrous to seek to achieve that by robbing the rural areas. [HON. MEMBERS: "Hear, hear."] Before Conservative Members get carried away in their applause, I must tell them that I am not impressed by the pious protests of the Tory Party on this subject. Most rural councils are Tory-controlled, and their great ideal is to provide the minimum of services for the minimum of rates. The Opposition Front Bench is pledged to cutting back public expenditure and we all know the effect that would have on local authorities, as with everything else. No one is under any illusions on that score.
In the Borders we already have the barest minimum of services. If they are cut back any further some of them could disappear altogether. I am thinking particularly of certain local authority old people's homes, the upkeep of roads, and public transport in rural areas. For


another example, the loss of one member of the headquarters staff of the housing department of Berwickshire district council would represent a 25 per cent. cut-back in that department, which would make it virtually unworkable.
Hon. Members from rural areas such as mine are in serious difficulties. We are appalled by the apparent implications of these orders for some of our constituents. But it would be absurd for us to oppose them, because then we should be left with nothing. I appeal in the strongest possible terms to my right hon. Friend to reconsider the allocation of rate support grant to the rural councils, and to consider what he can do in the course of the year to right some of the injustices to which I have referred. I hope that he will deal with some of these points when he replies.

12.29 a.m.

Mr. J. Grimond: It is curious that, at a time when Parliament is said to have little to do, the only moment when we can discuss this important matter is for a short period in the middle of the night.
There is no doubt that the rural areas in Scotland feel that they have been exceptionally badly treated. I have a letter from the convener of the Borders regional council who points out that it will lose £400,000 through the redistribution of the needs element of the rate support grant, although it claims to have been extremely economical.
In Orkney and Shetland we are put into a serious position, as the Secretary of State well knows. I must emphasise again that oil is not a blessing. It has led to great disruption in the Islands. It has, of course, led to an enormous burden on the local authorities, which have to provide roads, houses and other services, and it has led to very high prices while many people do not benefit from it at all. Furthermore, no oil was landed at all in Shetland until about a fortnight ago.
What is more, the terminals are de-rated, and that brings me to the first point that I put to the Secretary of State. I realise that he knows it already, but I hope that he is seriously examining whether these terminals in Orkney and

Shetland should be exempted from the derating Acts.
In addition, owing to the revaluation in Orkney, which was more drastic than it was anywhere else in Scotland, with the exception of Shetland and Aberdeen, the resources element disappeared, and many people have been faced with immensely higher rates.
It must be noted also that the local authorities are now in difficulties in the recruitment of staff because all wages have been under pressure to rise and people are offered very highly paid jobs in oil. I should add that the industrial workers of local authorities are not at all well paid, and this is a matter which will have to be looked at.
All that is happening now is that the Government have offered Orkney £200,000 as island weighting, and Shetland £500,000, but this is nothing like the increase in the costs which the local authorities have to face. Moreover, I understand that similar treatment is being offered also to the Western Isles, although they have none of the problems which are the result of oil.
The Secretary of State said yesterday that he did not expect that rates in Scotland would rise by more than a single figure percentage. It is often forgotten that if they rise by a single figure percentage every year, that will be pretty stiff on top of the immense increase in valuations. But if the Secretary of State is to keep the rates in Shetland and Orkney down to even that figure, he will seriously have to offer a great deal more than the £200,000 and £500,000 which have so far, I understand, been suggested by the Scottish Office.
I conclude by saying again that oil is a national matter. It is not Orkney and Shetland which are benefiting from it—it is the whole of Great Britain—yet we are put to enormous extra costs and dislocation. We accept these if the benefit of accumulated oil funds goes to put back our own economy, but it would be a tragic error to use them simply for current purposes to assist local authority finance.

Mr. Deputy Speaker: Mr. Secretary Millan.

Mr. W. Benyon: On a point of order, Mr. Deputy Speaker. Are


we to have two Front Bench speakers from Scotland and then two Front Bench speakers from England? If so, I must ask about the rights of Back Benchers.

Mr. Deputy Speaker: I am trying to proceed in the best interests of all right hon. and hon. Members. I indicated at the beginning of this debate what I proposed to do. With the winding-up speech of the Secretary of State for Scotland the Scottish debate is finished, and we are then back on the general debate.

12.32 a.m.

The Secretary of State for Scotland (Mr. Bruce Millan): I hope, Mr. Deputy Speaker, that that will reassure not just the hon. Member for Buckingham (Mr. Benyon) but the House as a whole. I wish to answer a number of points made in the few speeches we have had from Scotland and also to say something about the order as a whole, but I shall try to do so within a reasonable time.
First, regarding the order as a whole —I assure hon. Members that I shall come to the question of distribution a little later—the rate of grant provided in the Scottish order is exactly the same as in the previous year, and it is, of course, a very favourable grant, at 68½ per cent.
Next, as regards the level of rates for the year 1979–80, I repeat what I said yesterday, that I expect the overall increase of rates in Scotland to be well within single figures. In previous years I have given forecasts about rates in following years and they have been treated with a certain scepticism, but I am glad to say that in each case the actual rate increase has been rather less than I had forecast in the House. I say with quite considerable confidence that in 1979–80, provided that the local authorities in Scotland stick to the guidelines and stick to the relevant expenditure figures which I have agreed with them, the overall increase of rates will be well within single figures. Obviously, some local authorities will have rate increases which are higher than some others, but the average increase will be very modest indeed.
When I hear talk about the burdens on domestic ratepayers in Scotland I sometimes wonder whether hon. Members have been looking at what is happening. In the current year, 1978–79, the average level of domestic rates in Scotland has gone down by more than 6 per cent. be-

cause of the effects of revaluation. Domestic ratepayers in Scotland as a whole will next year, taking the years 1978–79 and 1979–80 together, be paying no more in rates than they paid in 1977–78. Therefore, it is absurd for hon. Members to talk about the increasing burdens on the domestic ratepayer in Scotland.
I now turn to the question of the amount of relevant expenditure provided for in the Scottish order. It is a figure that has been agreed and fixed, like the English one, against the general economic background. I am glad to say that, in distinction from what has happened in recent years, we have been able to make a modest but significant increase in relevant expenditure by local authorities for 1979–80. The order provides for a net growth in real terms in 1979–80 of about 2·2 per cent., which is consistent with the Government's announced plans for the growth of public expenditure generally, and compares with the I per cent. which was contemplated for 1979–80 in our last White Paper on public expenditure.
I understand from what the hon. Member for Henley (Mr. Heseltine) said that the official Conservative view is that there should have been no increase at all in local government expenditure provided for in these rate support grant orders. I should be glad to have that confirmed by the hon. Member for Glasgow, Cathcart (Mr. Taylor) when he speaks later.
May I give one illustration of the kind of thing we have been able to do within this modest growth in relevant expenditure for Scotland? It relates to a question of teacher staffing, which my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) raised. I have allowed for a further improvement in school staffing standards and for the continuation of last year's scheme for the employment of extra teachers in urban areas of deprivation.
My hon. Friends will be glad to know that, as regards primary school staffing, I have today issued a new circular which will provide for complements in the primary schools in total about 13 per cent. greater than those provided now under circular 819. I am sure that that will be welcomed not only in the education service but in Scotland generally.
That kind of improvement would not be possible if we were to adopt the suggestion of the hon. Member for Henley


that there should be no increase in local authority expenditure in real terms. That would mean that we should not be able to improve, for example, school staffing standards, and many of the other improvements outlined in the order would not be possible, either.

Mr. Dennis Canavan: If Strathclyde regional council or any other education auhority in Scotland were to employ more teachers than the national minimum standards, would it qualify for extra rate support grant?

Mr. Millan: The rate support grant is not a specific grant. Therefore, it does not relate to particular areas in this respect. What is specific is the special grant given for the employment of teachers in areas of urban deprivation. Strathclyde is by far the biggest beneficiary from that in Scotland. That is specific, and it is included in the aggregate of grants with which we are dealing.
I have maintained domestic rate relief at 3p in the pound because the domestic ratepayer in Scotland has done extremely well on average over the past year. I believe that the maintenance of domestic rate relief at 3p next year will also be a very favourable settlement from the point of view of the domestic ratepayer.
The total of oil-related expenditure disbursed in 1979–80 is £9·5 million, and this portion of the needs element is to compensate authorities in areas where there has been an impact because of North Sea oil development for some of the additional expenditure that they have had to meet.
The amounts that have gone to the areas which have had additional burdens placed on them because of oil development have come out of the general rate support grant. In other words, they have represented a transfer of resources from other areas of Scotland, including Glasgow and Strathclyde, to the areas that have been bearing the burden of oil development. There is no question of additional money having been provided for them by the Government; it has been part of the distribution formula, and these areas have had very considerable benefit from it.
There seems to be some kind of assumption in a number of quarters in

Scotland that the distribution formula should never change at all. Of course, it has not changed a great deal in Scotland in recent years. The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) talks about continual changes in the formula. There have been only modest changes in recent years.
But, of course, we must not let the formula be maintained on exactly the same basis from one year to the next. We have to look at changing circumstances. It would be easy for us if we were simply to make the formula exactly the same on a permanent basis. It would make the whole business of determining rate support grant much easier, but it would not make it fairer. Unless one changes the formula, one gets considerable elements of unfairness entering into the distribution of grant.
The most significant changes are related to population. Again there seems to be some misunderstanding about this, because hon. Members as a whole do not seem to realise that, for the last 10 years, there has been a provision in the distribution formula for population decline. It is not new to introduce a provision for population decline.
Falling population, among other things, tends to be a characteristic of deprivation, which generates expenditure requirements, and there is a time lag before expenditure reductions from falls in population take effect. But in my view the provision for population decline made hitherto does not adequately cater for continuous decline over a long period, as in the case of Glasgow and one or two areas in the West of Scotland.
I have therefore introduced a new factor into the 1978 order which makes some allowance for population decline of more than 5 per cent. over 10 years. This, of course, is related to urban deprivation, and there is not an hon. Member who does not at some time or other make great speeches about the needs of the urban areas and how we ought to be doing rather more for them. I am taking them at their word. I am doing rather more for the urban areas in this distribution formula, and it is a perfectly proper and appropriate thing to do.
But, of course, the change that is being made is very modest indeed. Some of the comments about it are ridiculously


exaggerated. The total change is only about £6 million in needs element, and the needs element itself amounts to £861 million. The total provided for amounts to well over £1,000 million. We are talking about a redistribution of about £6 million out of that grand total of £1,100 million to £1,200 million. It is absurd to exaggerate the effect of that.
What is more, that is only the needs element aspect. When one takes account of the resources element, it works in the other direction to the extent of about £2 million, so that the total adjustment I am making is really the extremely modest one of about £4 million out of a total rate distribution of well over £1,000 million. In any case, grant will increase in real terms resulting from the enhancement of relevant expenditure and will subsequently increase in cash terms in virtually every area in Scotland: I do not think that there is one council in Scotland that will not have more rate support grant paid in 1979–80 than it has had in the current year.
Nor are these changes in distribution only in relation to the urban areas. I have also changed the islands weighting. That affects very favourably the rural areas of Orkney and Shetland and the Western Isles. These are not urban areas. I do not know why the right hon. Member for the Western Isles (Mr. Stewart) is not here, because his authority does very well out of the new distribution formula, as in my view also does the constituency of the right hon. Member for Orkney and Shetland (Mr. Grimond).
In Orkney and Shetland there is a particular temporary problem which will disappear after 1979–80. It may well disappear during 1979–80. Then in rating terms Orkney and Shetland will be among the most prosperous areas in Scotland. The right hon. Gentleman spoke about losing the resources element. He is saying in effect "We are now so prosperous in rating terms that we do not qualify for resources element." There is only one other authority in Scotland of which that can be said. I have recognised Orkney and Shetland's temporary problem in the increase in Islands weighting.
I have also introduced another factor, or extended a factor, which is of benefit to the Highland region. This, again, is a

rural area, not an urban area. When the hon. Member for North Angus and Mearns asserts that this is all in favour of the urban areas against the rural areas, he is talking the most absolute nonsense. If he applied himself to the facts, he would know that.

Mr. Buchanan-Smith: Mr. Buchanan-Smith rose—

Mr. Millan: If the hon. Gentleman will allow me, I shall give way in a minute. I want to make one further point about that in terms of equity. Then I shall give way to the hon. Gentleman.
Taking the whole of Scotland and whole regions—that is, regions with the associated districts and islands authorities—and comparing the new distribution formula with the old and comparing the expenditure net of needs element of grant, we find that eight authorities moved closer to the average and only one authority—the Lothian region—moved further from the average in the new distribution formula provided for in the order. In other words, the order is very much more equitable than the previous distribution order.

Mr. Buchanan-Smith: Will the right hon. Gentleman explain the loss to the Grampian region of £2¾ million, the loss to Fife of £1¼ million and similar amounts for the Borders, and in Dumfries and Galloway? That is the question I want answered.

Mr. Millan: I am just about to answer it. I am very glad that the hon. Gentleman has asked me these questions. I shall take these regions in turn. Let us take Grampian region's expenditure net of needs element, which is what we are talking about. Under the previous distribution formula, Grampian region was bearing expenditure of only 93 per cent. of the Scottish average. This formula will take it up to 98 per cent. So it is still under the Scottish average.
The Fife region goes up from 86 per cent. to only 89 per cent. So in terms of net expenditure being borne by the ratepayers it is well under the Scottish average. The Borders region goes up from 94 per cent. to 99 per cent.—again, still under the Scottish average. Dumfries and Galloway goes up from 85 per cent. to 90 per cent.—again, well under the Scottish average. The Strathclyde region,


which benefits from this formula, and which was previously at 106 per cent., comes down to only 103 per cent. So Strathclyde ratepayers are still bearing in terms of net expenditure rather more than ratepayers in the rest of Scotland.
It is absurd to say that this change in formula is a great bonus to Strathclyde and of great disservice to the rest of Scotland. Strathclyde is still bearing a burden that is proportionately a good deal greater than the rest of Scotland.

Mr. Teddy Taylor: Would the Secretary of State say that Councillor Peter Wilson, finance convener of Lothian region, was talking rubbish when he said that every mainland regional area in Scotland would suffer a loss in RSG next year which, as far as Lothian is concerned, goes to another region? Is he talking rubbish in saying that every single mainland regional council loses as a result of the change?

Mr. Millan: Yes. I believe it is true that every mainland region loses something. But the islands of Orkney and Shetland and the Western Isles and the Highlands stay roughly the same as the formula has been altered in their favour. Highland region's net expenditure is 85 per cent. of the Scottish average. Every single authority that has lost on this matter, apart from Lothian, remains below 100 per cent. of the Scottish average and the ratepayers in these regions still pay proportionately less, in terms of net expenditure, than those in Strathclyde. This is a very modest change in distribution.
My hon. Friend, the Member for Berwick and East Lothian (Mr. Home Robertson), I am sorry to say, said that the ratepayers in his part of the Borders region were paying rather higher rates than elsewhere. He is completely misinformed. The average domestic rates bill in the Borders region is only 80 per cent. of the Scottish average. Even in Grampian region, which is not one of the less prosperous regions of Scotland, the average domestic rate bill in 1978–79 was only 94 per cent. of the Scottish average.

Mr. Buchanan-Smith: It is Conservative-controlled.

Mr. Millan: The hon. Gentleman seems to be arguing that we should cut back on services. I hope that the hon. Member for Cathcart will deal with this in his speech.

Mr. Teddy Taylor: In fairness to his hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson), would not the Secretary of State accept that there is no other regional council in the length and breadth of Scotland losing as much, on estimated grant per head, as the Borders region? Would he not accept this while he is playing with the table of figures that is available to hon. Members? I should be happy to show the hon. Member for Berwick and East Lothian that his council is losing more than any other in Scotland.

Mr. Millan: I know that it is losing more than any other in Scotland but it is still below the Scottish average. The hon. Member for Cathcart is making absurd comments. The figure is still below the Scottish average and the domestic rate burden in the Borders is still very low compared with the Scottish average. In any case, the reduction in grant this year in the Borders amounts to less than 2p in the pound. It is a very modest reduction.
The hon. Member for Cathcart will have to explain to his constituents in Glasgow and Strathclyde why he will be voting against this order and square his action with the speeches he makes about the needs of Glasgow and its deprived urban areas. We are redressing the balance in a very modest way. It is absurd for the other areas of Scotland to have exaggerated over the past two or three weeks the effect of our proposals.
This a very favourable order generally. It is a high rate of percentage grant, which will mean a very modest increase in rates in Scotland in 1979–80. It provides for modest but significant growth in relevant expenditure, which will enable many services to which hon. Members attach importance to be improved on the basis of a distribution formula considerably fairer than those previously employed.

12.55 a.m.

Mr. Gwynfor Evans: I want to concentrate on the injustice which is being done through the distribution of


the rate support grant and particularly the needs element in the two western counties of Wales—Dyfed and Gwynedd. They should not really be called counties because they are big enough to be provinces and cover in area almost halt the territory of Wales. We know that the grants discriminate against non-metropolitan areas, and in Wales we have no metropolitan areas. All our eight counties are non-metropolitan areas.
Addressing the Consultative Committee on Local Government Finance, the Secretary of State said that his policy
 is certainly not one of retrenchment; it is one of modest growth in the provision of vital services that local government provides for the community, and stability in the financing of that expenditure.
I should like to examine the situation in Dyfed and Gwynedd in the light of the Secretary of State's three criteria—no retrenchment, modest growth and financial stability.
The trend since 1974–75 is shown by the fact that since then London's needs grant per head has risen by 112 per cent. but Gwynedd's has risen by 46·5 per cent. and Dyfed's by 42·8 per cent. Dyfed in 1974–75 received 0·776 per cent. of the total for England and Wales. Next year it will receive 0·685 per cent. If they received the same percentage of the whole as they received in 1974–75 Gwynedd would be getting over £3 million more next year and Dyfed would be getting over £5 million more. But Dyfed is to get an addition in cash grant of £1,640,000 in real terms. There will actually be a fall of £365,000, equivalent to a rate of 6p.
Over five years, Gwynedd has lost 12·5 per cent. and Dyfed has lost 12·8 per cent. Compared with the average for England and Wales, Gwynedd stands to lose £697,000 between 1978–79 and the next year and Dyfed stands to lose £1,040,000 in the same period of one year. So much for the Secretary of State's "modest growth" statement and his claim that he is securing stability in financing expenditure on vital services. Obviously, in these cases, there will be a steep rise in the county precepts.
In stark contrast to the loss suffered by these two counties, London, where so much of the wealth of this kingdom is concentrated, is to receive an extra £41

million in real terms on account of the growing needs, says the Secretary of State.
Have Dyfed and Gwynedd no pressing needs? Quite apart from providing the same basic social services, what of their higher than average proportion of old-age pensioners? What of their higher than average proportion of persons with low incomes? What of the size of their territories and the sparsity of their populations, which entail large numbers of rural schools and extra costs in the administration of social services? What of bilingualism? Have they no problem with their very long coastline and with tourism, which doubles their populations during the summer months, involving additional costs for the basic services?
Have they no problems of inflation and increased interest charges? Those charges, together with inflation and increased wages, will probably swallow up alone the whole of the overall increase allocated to Wales. The standards of its present services, which are already being cruelly cut, will not be maintained, let alone improved. Still more cuts will be the order of the day. What has the Secretary of State to say to this, in view of his statement that his policy is certainly not one of retrenchment? To exacerbate the situation still further, the new grant is on the basis of the late 5 per cent. norm for wages and salaries.
The London-based secretary of NALGO has said that the increase in expenditure is not enough to pay the local government work force adequately. The settlement, he said, is a recipe for continued stagnation. If that is true of London—" the great Wen "as Cobbett called it—which has been sucking the material and human wealth of our little country into its system for centuries, how much bleaker is the outlook for Dyfed and Gwynedd? How is the army of low-paid workers to take a 5 per cent. increase across the board when inflation will be considerably in excess of that figure?

Mr. D. E. Thomas: Will my hon. Friend accept that Gwynedd, according to the recent new earnings survey, is the lowest-paid area for manual workers in the whole of the United Kingdom? Is not this a reason for demanding that provision of rate support grant services should be adequate?

Mr. Evans: That is a vital point. I have tried to show the need for an improvement in the grant, on this ground among others. Dyfed and Gwynedd should at least have received enough money this year to restore some of the cuts they have had to make. They should have been allowed to maintain at least this year's standards of social and local government services. Instead they will be forced to follow a policy of still more harsh retrenchment.
When they look over Offa's Dyke they will see in the metropolitan areas people who are doing quite well. The Secretary of State has contended that it is a pure coincidence that the biggest concentration of votes happens to be where the grants are being increased most. That may be true, but it seems strange that there should be such a coincidence.
The Secretary of State may also say that we are, after all, receiving in Wales a £7 million increase. That sounds impressive, until we notice that Essex alone is receiving an £8 million increase—£1 million more than the whole of Wales. If Wales can be lightly brushed aside in this way, we have, sadly, to admit that it is largely our own fault. The Welsh county, district and community councils have not had the wisdom to form a strong all-embracing association of Welsh local authorities, with its own offices and staff and its own research workers. Such an office could have prepared a strong case for Wales.
I am glad to see that we are likely to have an elected Assembly. I hope that not only will this give Wales a stronger voice than we currently have in this House but that it will draw together the local authorities in Wales in the type of organisation which I have mentioned. I urge the Government to do our people a little more justice. We dare not ask for a restoration of the position as it was three, four or five years ago. We can ask, with some justice, that at least the impaired standards we have had this year be continued.

1.4 a.m.

Mr. John Forrester: In the past few years the Staffordshire Members of Parliament on both sides of the House have been united in their concern about the way in which the rate support grant has affected Stafford-

shire and its services. The right hon. Member for Stafford and Stone (Mr. Fraser) said earlier that Ministers had listened willingly and patiently to the complaints we put to them. It is, therefore, something of a change and a pleasure to be able to say to my right hon. Friend that Staffordshire appreciates the changes that have been made in the formula which have improved the position.
The present rate support grant means that Staffordshire will gain about £1 million in real terms. It could have been more and we should have liked more, but we are hoping that we can keep the rate increase to about 10 per cent. There have been increases of 22 per cent. and 15 per cent. in previous years, so 10 per cent. is acceptable. However, it is still an unhappy commentary on general inflation.
Much depends on a 5 per cent. settlement in the local authority sector. That is a dream that may not come true. If there is a settlement that goes 5 per cent. beyond the 5 per cent. policy, there will be a cost of £6 million to Staffordshire. That would mean imposing a 5 per cent. to 6 per cent. extra burden on the rates. We are viewing the Government's fight against inflation most keenly.
There is a special problem in Staffordshire that I ask my right hon. Friend to consider. There is a high proportion of schoolchildren. Numbers of children vary from authority to authority, but in 1977–78 in East Sussex there were 143 pupils per 1,000 of the population whereas in Cleveland there were 224 and in Staffordshire 201. Staffordshire had the fifth largest school population in Britain. In Essex the cost of maintaining 10,000 pupils at school would fall on 72,000 ratepayers whereas in Cleveland it would fall on 46,000 and in Staffordshire on 52,000. Staffordshire is not the county that is worst off, but it has a burden that many other counties do not have to bear.
It may be that my right hon. Friend cannot do anything to alleviate the burden in the present settlement. Clearly not all the anomalies can be ironed out overnight. However, I urge my right hon. Friend in the coming year to initiate some research into the problem that I have outlined with a view to including in next year's assessment of the rate support grant


a formula that will help authorities that suffer from a large child population. It is not a problem that is confined to Staffordshire. It is to be found in many other counties in England and Wales.
My right hon. Friend said that he would take account of other legislation and other factors that may arise during the coming year in considering rate support grant increase orders. I ask my right hon. Friend not to encourage highly expensive legislation, thereby adding to the burdens of local authorities. They are already over-stretched and looking for economies in the services that they offer. No one objects to 100 per cent. grants for new legislation, but anything that imposes a greater burden on the authorities must be borne by the rates or supported by greater economies in the present services.
There is no unanimous approval for the diversion of some of the needs element to the district councils but as a district council representative I support it. I am sure that my right hon. Friend is not happy with the present method of calculation, which I understand is based on authorities' expenditure over the past few years. There is a fear that it will become an annual loan and that the big spenders will be those that get the largest handouts. I hope that my right hon. Friend will consider as a fairer system one that is based on population.
I ask my right hon. Friend to bear in mind—I am sure that he does constantly—that cities have problems when they are within a shire county. Their problems equal those of cities and towns in the larger conurbations. I ask him to continue to seek to find a formula that will take that into account so that the statistics of the towns and cities with urban decay are not lost within the general statistics for the county as a whole. I would support putting more money into these inner city areas but, as I have said before, this would be outside the general rate grant formula.

1.10 a.m.

Mr. Tim Sainsbury: Two things are already clear in the debate, Mr. Deputy Speaker. First, it is absolutely outrageous that we should have only four hours in which to deal with a subject of such vital importance to every ratepayer in the country. Secondly, it is clear that

there are very few friends indeed—we have not heard from any of them yet—of this rate support grant order. It is a very unsatisfactory order indeed.
Before making a few brief general remarks on it, I should like to raise one specific point which affects my constituency very importantly, although it affects most constituencies. The Under-Secretary of State will recall that in the debate earlier this year on the Rating (Disabled Persons) Bill I was given what I think was intended to be a very clear assurance when he said that the measure
 will be operated so that the healthy constituents about whom the hon. Member for Hove is concerned will not as a consequence find an extra charge on their rates as a result of the relief given to those of his constituents who are disabled ".—[Official Report, 12th May 1978; Vol. 949, c. 1637.]
The relief required under the Rating (Disabled Persons) Act 1978, in the county of East Sussex, will certainly be over £300,000, and we do not yet know the full extent of the cost. It is not clear at all yet in the rate support grant order how the Government intend to fulfil the undertaking they gave in that debate, and later to me in correspondence. I should like an assurance that my local authority —and, indeed, all local authorities which are required to give relief under the Act —will be fully compensated for so doing and will not find an extra burden imposed upon them.
Having dealt with that minor point, Mr. Deputy Speaker, I should now like to turn to the more general aspects of the rate support grant. What is really offensive about it, and what moves hon. Members in all parts of the House to criticise it, is not only the method by which it is being distributed but the manner in which it is being presented—or, rather, I should say misrepresented—by Ministers. It is presented by them as being an assessment that is really genuinely based on need, and yet that proposition is entirely phoney. It is much more largely based upon the pattern of extravagant expenditure by some local authorities, a pattern which is boosted and encouraged, rather than a genuine assessment of needs. It is time that Ministers stopped pretending that something called a multiple or a regression analysis genuinely assessed the needs of local authorities. The whole


thing is really misrepresented, starting with the domestic element.
We are assured that domestic rate relief will be maintained at the previous level. It is not being maintained at its previous level, for as the level of rates goes up and the domestic rate relief remains the same in terms of pence, its effect is gradually diminished. In addition, we have the special Welsh element. I should like the Minister to explain this in regard to a relief which was introduced, in the words of the late Anthony Crosland, when he was talking of the rate support grant, in the following way:
 The basic reason for the wide margin "—
that is in domestic rate relief—
 is that the cost both of local government reorganisation and of water reorganisation was much greater in Wales than it was in England."—[Official Report, 12th December 1974; Vol. 883, c. 789.]
Are we to believe that the Welsh are still suffering to that extent, in spite of water equalisation? What new explanation is there for this special subsidy, worth some £45 million, other than the intention of providing a little bonus for a number of marginal Labour seats?
What about the resources element? Even the population on which it is assessed is doubtful, but we should be quite clear about the resources element as a matter which is largely expenditure-based. I quote from the Government's own White Paper on the rate support grant order of 1978, at paragraph 49:
 Resources element is calculated as the product of the authority's rate poundage and its local deficiency in rateable value.
One does not have to be a brilliant mathematician or computer analyst to see that if the rate poundage is multiplied by the deficiency, the higher the rate poundage, the higher the resources element that will be received. That is one of the principal reasons why the extravagant and wasteful local authorities under Socialist control, pouring the ratepayers' money down the drain on things such as direct labour organisations, get more and more encouragement for continuing to do so.
Of course, the resources element is a bit more straightforward in its distortion than is the needs element. We have perhaps had enough criticism already of the

multiple regression analysis. In a way, I could read out the speech that I made last time and still wait for the Minister's reply to the charge of multicollinearity. I do not think that he has yet understood it. He certainly has not answered it.
We have the factors, and the change in those factors, to which my hon. Friend the Member for Henley (Mr. Heseltine) so clearly referred. I find it most extraordinary that the factor of lone-parent families, which was not included at all in 1974–75, now takes up no less than 32·3 per cent. of the needs element. Yet factors relating to the elderly are almost entirely absent. Are we meant to assume that there are only needs because of lone-parent families? As Ministers well know, the statistics actually relating to the number of lone-parent families are, to say the least, highly suspect. The Finer report, which is the authoritative document on that subject, was very clear on that matter.
The idea that the multiple regression analysis is related to needs is shown to be a nonsense when one considers that East Sussex has suffered a loss of 13·5 per cent. in its share of the rate support grant from 1974–75 to the current year, and 6·3 per cent. alone last year. Yet that county has by the most normal standards a very high need under the social services element. For example, 14·2 per cent of the population is over 65 and 10·4 per cent. over 75—well in excess of, nearly double, the national average.
East Sussex has more elderly in care than any other county in England, based on the proportion per 1,000 of the population. It has more blind and partially sighted than any other county in England. It is that county, and districts such as Hove—with more than one-third of its population retired—which are being deprived of help. Yet the Secretary of State has the gall to tell us that this multiple regression analysis is a genuine assessment of need.
The truth is much clearer. Appendix F, paragraph 2, of the 1977 White Paper stated:
 The technique "—
that is, multiple regression analysis—
 identifies a quantitative relationship between the per head expenditure of local authorities and the incidence of various need and cost factors ".


That is what it is doing. It is putting through this complicated system—a formula designed to bring out the right answer in relation to expenditure patterns, not in relation to need patterns. This is why continually the more economical and efficient Conservative authorities are penalised, while the extravagant and inefficient Socialist authorities are encouraged.
The rate support grant settlement has been presented as one which is genuinely based on need, which it certainly is not, and still more as one that is likely to keep down the increase in rates to single figures. Yet I know that the increase in the Hove district will be nearer 20 per cent., and one-third of my constituents are retired and living on their pensions. These pensions will not go up by 20 per cent., and, according to the Government's policies, no one's earnings will go up by 20 per cent. This is a bad rate support grant settlement and I call upon all hon. Members to vote against it

1.19 a.m.

Mr. Peter Hardy: Even more astonishing than the words of greed, irresponsibility and selfishness which we have heard from the Conservative Benches has been the display of mathematical incompetence by the hon. Member for Henley (Mr. Heseltine). Far from his calculations being accurate, the position is that if the average householder with a typical income faces a rate increase which is twice the level which my right hon. Friend expects, his gross income will need to increase by less than three-quarters of 1 per cent., and not the 14 per cent. or so which the hon. Gentleman suggested was necessary.
This is surprising, because the hon. Gentleman is one of those Conservative Members who is sometimes thought to be numerate. It suggests that the private schools of Britain need to concern themselves with improving basic skills.
At least the hon. Gentleman did not criticise the principle of equalisation and central support. We must congratulate the Conservatives on that advance. They now accept that if a local authority faces particularly severe problems and has inadequate resources, it should receive greater support. However, I suggest that if the rate support is granted on that pre-

mise, we should be confident that the support is used for the purposes for which it is designed. If the payment of equalisation is used to stabilise inadequacy, questions in the House are justified and ought to be asked at a more reasonable hour than this silly time.
I do not want to harp on our local position, which is a little better this year, but only because it was so unsatisfactory last year. I am concerned because, while I am grateful for the improvement, I do not want to find that we are complaining again next year. I hope that my right hon. Friend the Secretary of State will ensure that the improvement of the safety net in the shire counties is reflected in the metropolitan arrangements so that if there is a variation on existing arrangements of 2½ per cent. above or below the previous year's determination, there can be a built-in inhibition to that change. It is highly desirable that we should promote consistency in local government finance.
It is perhaps because of the inadequacy of last year that we have had some disturbance and disappointment in my area in recent months. There has been considerable criticism of my local authority for not improving the pupil-teacher ratio and many inaccurate comments have been made. The Rotherham authority is 12th of the 36 metropolitan areas in the amount it invests in education. We need to improve our pupil-teacher ratio and I hope that the better rate support that we are to receive next year will allow the local authority to make an advance and trust that meaningful negotiations will start soon.
The Government must accept that they need to explain far more clearly that, while they provide the bulk of the money spent by local authorities, it is the local authority and not the Government which determines most of the patterns of expenditure in its area. Last year, the Government expressed the hope that 1½per cent. more teachers would be employed. It was said that the rate support grant would be increased to provide for that improvement.
An improvement was secured, but it was less than the extent desired and some people claimed to believe that each local authority received funds earmarked for that purpose. As the Secretary of State


can confirm, that was not so. Extra provision could be added only to the national total and, one hopes, averaged out.
I do not suggest that the Government should accept the alternative and return to the system of specific grants, because there are powerful arguments against that, but if the Government are to refrain from taking that power, they should at least explain more clearly that, while they can hope, whilst they can support opportunity and whilst they may seek to persuade, they cannot instruct that Exchequer moneys should be used for the purposes for which they may have been hopefully provided.
I recognise that there are special needs and difficulties in various Harts of Northern Ireland, Wales and Scotland, but educationally, socially, environmentally and economically some of the older industrial areas of England may face needs that are just as acute. It therefore seems right for me to ask the Secretary of State whether he is satisfied that rate support is equitable in that context.
This year, rate support for Wales—and the hon. Member for Carmarthen (Mr. Evans) will not be comforted by the figures—is £184 per head. In Scotland, it is £199 per head. In the area of the Greater London Council, the figure is £161 and in the rest of England, excluding London, the support is £137 per head. I accept that there are severe difficulties in Wales and Scotland, but sooner or later the needs of the older industrial areas of England will have to receive a higher priority. I hope that long-term thinking is being given to that matter.
I wonder, at the same time, whether my right hon. Friend is satisfied that local government is always effective in its financial efficiency. I have seen a suggestion that it costs immensely more to administer each council home in the area of the Greater London Council than it does in my area. I know that my right hon. Friend is to write to me about this matter, so I shall not pursue it very far.
But I hope that taxpayers' money is not being spent in supporting any local authority which is wasting resources in pursuit of the imitation of the least competent of the estate agents within its area. Certainly it would ill become the Government to be rather too cautious about

transport supplementary support for South Yorkshire if they are to ignore the profligate attitude of some of the local authorities which incur vast and bureaucratic expense in the way that the GLC is doing for the administration of its council properties.
As I said, I welcome the modest recovery in the support for Rotherham. I hope that we shall never again experience the adverse and severe fluctuations which we encountered last year. I hope that we can see modest advance, not least because some of the people employed by local councils receive appallingly poor wages. I would hope that there can be marked advance during the next few months to lift the level of some of their earnings.
At the same time, I hope that we shall see a greater concern for the explanation of reality as well as for the continued endeavour to secure more equitable distribution of public support for local spending, which is essential. I certainly hope that the views of some hon. Members to whom we have already listened this evening will never be applied; otherwise the cause of justice in this country will be forgotten.

Several Hon. Members: Several Hon. Members rose—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. Seventeen hon. Members are trying to catch my eye. The winding-up speeches will be starting at five minutes to two o'clock. I appeal for brevity.

1.26 a.m.

Mr. Percy Grieve: I shall do my very best to be brief, Mr. Deputy Speaker, because I recognise that many of my colleagues, like me, have most anxious constituency problems in regard to these orders.
The orders have evoked bitter opposition on the Opposition Benches and scant support on the Labour Benches. Many of the Labour Members who have spoken in the debate have recognised the anomalies and inequities in these orders which are common to both Scotland and England. It is not the case that those anomalies and inequities are all between the country and the town. I represent Solihull, a metropolitan district. Solihull has been bitterly penalised by successive rate support grant orders for the last four years. This year, redistribution of the


needs element alone will add £2 to the rate bill of every ratepayer in Solihull.
The hon. Member for Rother Valley (Mr. Hardy) asked whether money was being paid to extravagant authorities. I paraphrase his words, but that was the gist of his question. I can answer that question. The answer is clearly in the affirmative. Whilst Solihull ratepayers are to lose £2 a year each, the ratepayers of Greenwich are to get £27 a year, those of Hackney are to get £17 a year, and those of Camden are to get £15 a year. It is not in Solihull that £80,000 a house is being spent on council houses: it is in Camden.
The matter does not end there. In Solihull over the last four years there has been a reduction from 66½ per cent. to 61 per cent. in the Government content of local government finance. That means that out of every £100, the ratepayers are now having to find £39 for local government finance, as compared with £33·50 when the present Government came into power.
The reason for this is perfectly plain. The reason why Solihull is being treated in this way is also perfectly plain. The reason is that Solihull is an economically run authority. The level of spending on services judged by expenditure per head has consistently ranked amongst the lowest of all metropolitan authorities, and still it is done extremely well. Yet we find that in inner city areas, where all sorts of extravagances are practised, money is poured into the coffers by this selective judgment of how the grants shall be administered.
I am not saying and I am not to be taken as saying that there are not many desperate needs in inner city areas. At the same time, it is not and ought not to be the duty of the Government to encourage extravagance in local government spending. I referred just now to an example in Camden of such spending. It is monstrously unfair that well-run local authorities, urban areas themselves with great needs, should be penalised in the way that my constituency is penalised in Solihull.
My constituency is only a part of the Solihull metropolitan district. The other part is represented by the hon. Member for Meriden (Mr. Tomlinson)— [HON. MEMBERS: "Where is he? "1 It is in that

part of the metropolitan district that the greatest needs arise and the greatest cause for expenditure arises. We have there virtually a new town in Chelmsley Wood, and we have areas of considerable deprivation— areas which are crying out for and are receiving old people's homes, libraries and other amenities provided by the whole of Solihull. I regret that the hon. Member is not in his place to support my plea on behalf of the people of Solihull.
I promised to be brief, and I shall say very little more. The case which I have exemplified from my own constituency can be repeated all over the country. It is not right that Parliament should be passing orders into law which are producing anomalies of this kind, based on wholly arbitrary criteria laid down by the Secretary of State.

Mr. Shore: Rubbish.

Mr. Grieve: The right hon. Gentleman says "Rubbish ". These are his criteria. It is not rubbish at all, and what is happening in my constituency is a very good example of that fact.
I hope that when we come to debate this matter next year, we shall have a Conservative Government who will see that justice in this matter is done and that inequities and anomalies of this kind are not repeated.

1.32 a.m.

Mr. Frank Hooley: In appendix A on page 14, the relevant expenditure for the urban programme is given as £69.4 million. In appendix B, on the other side of the page, the grant calculated is £89 million. It appears, therefore, that the Government are authorising £20 million worth of grant for which there is no corresponding expenditure figure, and I am curious to know how this works out.
However, my main concern is with the needs element of the rate support grant and its impact on Sheffield. The Secretary of State should not he under any illusion that dissatisfaction with the needs element of the RSG is confined to the shire counties. There is real bitterness and resentment in Sheffield at the outturn this year as well as last year, and I think that there is some justification.
For the purpose of my argument, I shall refer to some figures given to me by the


Secretary of State in a parliamentary answer last week rather than figures supplied to me by the city treasurer, because there is some variation and I do not understand why. According to my right hon. Friend, the per capita grant under the needs element to Sheffield in 1977–78 was £95·32. This has fallen in 1979–80 to £89·85. That is a decline of 5·5 per cent. For Manchester, the corresponding figures are £153·17 in 1977–78 and £162·84 in 1979–80. Not only is there an enormous difference in the figures. Whereas Sheffield's has gone down 5·5 per cent., Manchester's for some reason has gone up. For Newcastle, again we see a rise in the corresponding period, £103·30 in 1977–78 and £104·46 in 1979–80. The same is true of Liverpool where the increase is from £146·37 to £147·88. These are not such big jumps as in the case of Manchester, but in each case there is an upward trend as compared to a downward trend in Sheffield.
I have deliberately chosen these cities because they are all major industrial cities in the North of England. I have excluded London, which is in a different category altogether. I have tried honestly to compare like with like. I cannot understand why the major industrial city of Sheffield should be treated worse than comparable great cities. It cannot be argued that the needs of men, women and children in Sheffield are so radically different from the needs of their counterparts in Manchester, Liverpool, Leeds and Newcastle.
These are the major industrial provincial cities of the North of England. It is ridiculous to argue that they are so different as to justify such widely differing treatment in the needs element of the grant. I am not referring to the other technical adjustments.
Nor do I believe that on a commonsense basis the per capita needs calculation for the inhabitants of industrial cities should vary to the extent it does as between Sheffield and Manchester. The per capita ratio for Sheffield is 100, and for Manchester 181. I would readily accept that there would be some variations. The relative levels of unemployment could account for variations of need, but I do not understand how any commonsense calculation could produce a variation of 81 per cent.
That result is produced by the famous pseudo-scientific statistical technique known as regression analysis. The results it produces will depend clearly on the factors which are chosen for the basis of the analysis. It is not an objective slide rule system. There are selective and fairly arbitrary selective elements in the formula used to calculate the grant. The table on page 23 shows that some factors are included in some years but are omitted in others. There is no obvious logic as as to why certain factors are included at certain times.
The most striking omission in the calculation for this year and next is the factor of the elderly. That is most important for Sheffield as well as for other areas. I am puzzled by why that factor, which is becoming increasingly important, has now been omitted after having been included in previous years.
Let me quote here from the Sheffield treasurer on this point. He writes:
 Factors of significance to the City, elderly persons, and declining population, were not selected and not tested respectively for either the 1978–79 or 1979–80 fomulae. The factors used in the current formula assess the City's spending need 13·4 per cent below its actual expenditure level in the base year 1977–78. This folows a 6·5 per cent under-assessment for the current year, which shows a worsening position.
The Sheffield needs element of the rate support grant is below the average for England and Wales, and it is 12½ per cent. below the average for metropolitan districts. The cumulative loss of income over the past two years, according to the city treasurer's calculation, is some £8 million, or the equivalent of an 8p rate.
The strangeness of this calculation rests in the fact that Sheffield has been accepted as a programme authority with special inner urban problems and it would appear, on the one hand, that while the Government are offering us a modest £1 million or £1¼ million under the urban programme, on the other hand Sheffield is being penalised in some peculiar way by the regression analysis calculation which is actually reducing the level of the needs element of the rate support grant.
If there are some special or peculiar explanations for that situation, I shall be glad to hear them, but I must tell my right hon. Friend that I do not understand, comparing like with like—taking


the great industrial cities of the North of England as a group—why Sheffield is assumed to have a declining rate of need of 5½ per cent. whereas in all other cases the opposite is true, in some cases a modest increase and in the case of Manchester a quite substantial increase. I find that an anomaly which is quite unjustifiable.

1.41 a.m.

Mr. W. Benyon: I do not think that in my 20 years' connection with local government I have ever read such a strong and incisive case against a rate support grant as that made by the Association of County Councils.
If the Secretary of State wants to know why I and my hon. Friends from Buckinghamshire—I know that I speak for them all—are so angry, he need look no further than the increased figures for the needs element of grant per head of population as between Buckinghamshire and London.
In 1974 the figures were £70 per head for London and £55 per head for Buckinghamshire. By 1978 those figures had risen to £122 for London and £58 for Buckinghamshire—in short, a rise of 75 per cent. for London and 5 per cent. for Buckinghamshire—yet during that same period the population of London had decreased by 1·4 per cent. and our population had risen by 5·5 per cent.
As a result, we are faced this year with a rising rate, which must be 20 per cent. just to keep the services as they are. It will probably have to be more than that.
What is all the talk about balances? We have no balances. We used them up last year, and even last year they were too small for the sort of enterprise which we were running.
I am proud to represent in my constituency the fastest-growing part of the whole United Kingdom. The majority of this growth is coming from London yet, far from this being recognised in the rate support grant, Buckinghamshire is being penalised for taking this large number of people for settlement.
Of course, I genuinely accept that the cities have great problems. But, surely, it is inconceivable that the real spending needs of the inner areas of London should vary to that extent from the spending needs of Buckinghamshire, which is taking

such a large number of people from London for settlement. Even more inconceivable is it that these changes should take place so quickly. The inescapable conclusion is that these changes have been made to reward spendthrift Labour councils in those areas where the local council is threatened. To those that spend more, more will be given. We have heard that said already this evening.
On any concept of equity the Government should abandon their present approach and for the coming year adopt a different form of calculation for the rate support grant, at least giving something back to those local authorities, such as my own, which have lost so heavily over the past five years.
However, if the Government are determined to go ahead, they must try to mitigate the effects of their approach more than they are doing at present. Some of the ways of doing that have been suggested in the brief from the Association of County Councils, and for the sake of brevity I shall not spell them out. The Secretary of State knows what has been suggested, and I support it wholeheartedly.
I shall say a brief word now about the transfer of the needs element to district councils. My district council is one of those that will benefit, but I must point out that making a sudden change like this is bound to create great difficulties, as is spelt out in the excellent brief to which I have been referring.
Unless the needs element that has been given to councils is taken off the rate, and therefore compensates for the extra rate that will have to be put on by the counties, the whole point will be lost. As I look up and down the country, I very much doubt that that will happen.
Secondly, the districts deal only with certain items of expenditure. The major services of education, social services and transport will remain with the county, and they will come under increased pressure.
Whatever the Government's true motives in producing this rate support grant—and I have indicated that I think they were basically political—they have contrived to make a bad system very much worse. The anomalies, discrepancies and unfairness of the rating system have become far more blatant over the past four years. As a Member of Parliament,


all I can do is to make certain that my electors know where the blame lies.

1.46 a.m.

Mr. Andrew F. Bennett: I suppose that by the very nature of things those hon. Members who represent areas that are rather dissatisfied with the settlement turn up for these debates and fight hard to say a few words, whereas those who are satisfied do not come to praise the Government.
I am here to express some dissatisfaction, although I shall be supporting the order, because I am well aware that Stockport has not done very well out of it. However, if the alternative formulas that were canvassed had been accepted, Stockport would have done even worse. Such areas deserve a little more help than Stockport has had from the order.
I particularly appreciate the building into the formula last year of the safety net, which helped Stockport, and I am pleased that it remains. However, for such areas there are considerable problems, and I wonder whether a little more thought could be given to varying the order for particular areas where there are problems.
One device that is used is that from year to year the area of the Isles of Scilly is changed in the order. I assume that that is to get the right figure to come out at the end. If that can be done for the Isles of Scilly, cannot specific elements be fed into the formula to relieve some of the anomalies that crop up for particular local authorities?
I think that in real terms Stockport is about £68,000 worse off, but that is before taking into account the Government's exhortation that there should be 1.6 per cent. growth, which means that in real terms it is probably about £500,000 worse off. But Stockport should be spending much more than that, because it has one of the worst pupil-teacher ratios in its primary schools of any area in the country. If it were to achieve both the Government's growth target and the sort of growth target that many people in Stockport feel it should achieve to get up to average standards, it would be going for a much larger sum, which would present many problems.
Moreover, within Stockport there are problems of allocation. The Government would have done much better to look at areas of specific grant. If I had more time I should try to develop that argument to show that some of the older parts of Stockport, the old borough, have many problems that are almost identical with Manchester's. Yet it seems to receive much less help for those parts of the town, on the theory that the money can be averaged out over the whole of the new area. But that theory does not work.
I particularly plead with the Government to look at the case for making sure that this time the low-paid local government workers do not lose. It is unacceptable to tell them that they must take 5 per cent. I can see the arguments for saying that in private industry the Government should set a norm of 5 per cent., and if in practice it turns out at 8 per cent. or 9 per cent. everybody can probably be satisfied. The stewards, the people who negotiate, may well feel fairly satisfied if they get a bit more than the target, and in terms of inflation the Government may well be very satisfied.
However, it would be a travesty of justice if we then told the local government workers, particularly the low-paid among them, "You must settle at 5 per cent." Therefore, I plead with the Government to enable the local government workers to receive at least the average going rate that everyone else ends up with, with just a little more than that average for the low paid.
I hope that in doing so the Government do not use the cash limits to put the squeeze on the local authorities and leave them with rate problems at the end, but come up with an increase order later in the year which enables the local authorities to make a realistic payment to the low-paid.

1.50 a.m.

Mr. Michael Jopling: I am glad to have the opportunity to put from the Opposition Benches a view from the North of England. Especially do I want to say that there is no part of the country where the Secretary of State's remarks on this order will be received with more of a hollow laugh than in Cumbria. No one there will believe that the background to the order is not a matter of political motivation. It is


widely believed in Cumbria that the order is just blatantly unfair.
Cumbria is heavily reliant on the rate support grant. Since 1974, its needs grant has been inexorably whittled away, however. Each year another bit has been chiselled off. This year, Cumbria will lose £1½ million. From the list I have received, it seems that only five non-metropolitan counties will lose a bigger proportion of their needs grant than Cumbria.
Perhaps it is hard to attack any individual year's treatment, but overall these cuts in five years have had a devastating effect on Cumbria. In terms of the needs grant this year, the income from the rate support grant will be down by £9 million on what it would have been if the 1974 criteria had still been used. It is worth explaining to the House just what that means in material things in a county like Cumbria.
As a result of this change, we have been done out of the money which would have paid for the fire services, economic development and planning services, library services and consumer protection services, and also there would have been some cash left over from that in the end.
This has meant, apart from cuts in expenditure, increased rates to the ratepayers of Cumbria. We estimate that this coming year the rates will have to be 12p in the pound higher than they would have been on the 1974 basis. The Secretary of State for the Environment said that no county this year had to put up with more than a 2 per cent. reduction. That is what Cumbria will have to face this year. In 1978 it was 3p, in 1977 it was 3p, in 1976 it was 1½p, and in 1975 it was 2½p. Those are the increases in rates that these successive orders have meant to Cumbria.
What is especially irritating is that we are told that this cash has been diverted to the urban areas. It is extremely irritating to learn of some of the counties which are having relatively less difficulty than Cumbria on the figures we have received. We really do not understand why money should be diverted to the metropolitan areas and London.
My hon. Friend the Member for Devizes (Mr Morrison) said that his constituents did not resent money being diverted to London, but I am sure that the ratepayers

of Cumbria resent it very much. In Cumbria we have a great many economically deprived areas. We have the problems of West Cumberland. The whole of Cumbria is a development area, and a large part of it is a special development area.
Looking at the position of non-metropolitan areas in the North of England, where there are special development areas, it seems that Cumbria has been much the worst treated. Almost inevitably, over the years Durham has actually benefited, and Lancashire has benefited, but Northumberland to a lesser extent and Cumbria to a much greater extent have been clobbered. We want to know why no consideration has been given to the great problems of remoteness which one has in a county like Cumbria, where there are vast areas of mountains and uplands.
I have voted against these orders for the last two years; I regard this year's order as just another chapter in the story of Government cheating and deceit over this matter.

Mr. Dudley Smith: On a point of order, Mr. Deputy Speaker. I gather that you are about to call the Front Bench speakers. You will see from your list of speakers that about 10 Conservative Members who have sat here throughout the debate have not been called, yet by the end of the debate there will have been five Front Bench speakers—three by Government spokemen, one of these being a speech lasting nearly half an hour by a Scottish Minister. Will you call the attention of Mr. Speaker to this fact? It is yet another example of the erosion of the rights of Back Bench Members.

Mr. Robert Boscawen: Further to that point of order, Mr. Deputy Speaker. Is it not an absolute disgrace that this debate has been allocated so short a time although so many hon. Members wish to speak? Scotland, which has a population of only 5 million, has had five Members to speak for it. The South-West region of England, which has a population of 21 million, had not had one Member called to speak for it.

Mr. Deputy Speaker: I am the servant of the House. I understand that it is the


wish of the House that the debate should stop at 2.21. I can do nothing about that.

Mrs. Kellett-Bowman: Further to that point of order, Mr. Deputy Speaker. May I point out the very regrettable fact that not one Conservative Member representing the North-West has been called, although the population of the North-West is larger than that of Scotland and we have great problems?

Mr. Deputy Speaker: If we are to have any reply to the speeches which have been made, we should hear the Front Bench speeches.

Mr. Nicholas Winterton: Further to that point of order, Mr. Deputy Speaker. May I point out to you that Government Front Bench speakers have taken up one hour out of a four-hour debate? Many important areas of the country which are adversely affected by these orders have not had their views put forward in the debate. Will you please make known to Mr. Speaker the views of Conservative Back Bench Members so that he can, perhaps, make representations in turn to the Lord President of the Council?

Mr. Deputy Speaker: I am not sure that Mr. Speaker has any arrangements with the Lord President as to indicating what his wishes would be. Perhaps it would be best to contine with the debate; otherwise we shall not have any further speeches, either from the Front Benches or the Back Benches.

Mr. Michael Neubert: Further to that point of order, Mr. Deputy Speaker. Would you not think, on reflection, that it is a legitimate grievance of Back Benchers that in the event every Scotsman who sought to participate in the debate was able to do so, whereas there are countless numbers of English Members who wished to take part in the debate but who have been disappointed? In particular, London, which has 10 million inhabitants, has had its case put by only one Member.

Mr. Deputy Speaker: I am governed by the decision of the House, which is that the debate will stop at 2.21.

Mr. Michael Morris: Further to that point of order,

Mr. Deputy Speaker. The House is going to adjourn and we are now at 2 o'clock. Is there no means whereby the House—100 Members are present—can agree to extend the debate by an hour? It would not inconvenience anybody. There are hon. Members on both sides who wish to make modest contributions. It would not injure the House if we extended the debate.

Mr. Deputy Speaker: I am bound by the decision of the House, which is that the debate must end at 2.21.

1.58 a.m.

Mr. Teddy Taylor: I assure my hon. Friend the Member for Macclesfield (Mr. Winterton) and others of my hon. Friends that this particular Front Bench speaker will speak for a very few minutes indeed. Everyone will agree that, despite our views on the order, it has been highly unsatisfactory to have major orders for Scotland, England and Wales dealt with in a truncated debate in which many hon. Members who have sat here throughout the debate and whose constituents are seriously affected have not been called to speak.
The Secretary of State, in introducing the orders, used phrases such as" carefully judged ", "the best possible objective assessment ", and" a fairer pattern ". I think that he will accept, after the speeches which have been made from both sides, that this is very much a minority view. From his side, Members such as the hon. Members for Sheffield, Heeley (Mr. Hooley), Rother Valley (Mr. Hardy) and Berwick and East Lothian (Mr. Home Robertson) have made it clear that they do not accept that the orders are fair or reasonable.
Any order coming before the House which gives more money to one area and less to another would arouse controversy but also acceptance from those which gained. A strong belief has been expressed from both sides of the House that these orders establish part of a pattern of major redistribution over four years which has little relationship either to justice or to real need.
The first objection is that many of the areas which are losing under the orders this year have also suffered considerably over the last four years. My hon. Friends


the Members for Westmorland (Mr. Jopling), Buckinghamshire (Mr. Benyon) and Devizes (Mr. Morrison) and my right hon. Friend the Member for Stafford and Stone (Mr. Frazer) made clear that their authorities have suffered a great deal over the past three or four years and will again suffer considerably this year. They are all areas requiring help.
In 1974–75, the last year in which the Tories had influence, the English counties received 34 per cent. of the total grant. That figure is now down to 26 per cent., a substantial reduction. This year, it goes down again.
The second objection is that the formula has no objective assessment of need built into it. We have seen a shifting round of various factors. It seems that a judgment, perhaps political or economic, has been made by the Minister and factors inserted or omitted to achieve a desired result. The fact that unemployment has been excluded at a time when unemployment has reached an all-time high shows there is little justice or logic in the assessment.
The third objection is that authorities which have exercised prudence and restraint have been penalised. Many of those losing substantially today, which have also lost in recent years, are not the spendthrift authorities but authorities which exercised a great deal of prudence and restraint. As my hon. Friend, the Member for Westmorland, has said, complaints have been made that there appears to be some element of political motivation in the decisions. It is certainly a strange coincidence that those authorities which have consistently tended to lose under these orders have been Conservative-controlled. In these circumstances, there are many objections to the fairness and logic of these orders.
One question which the Minister must deal with is that raised by a number of hon. Members and relating to possible increases in expenditure. It is strange that among the assumptions built into the cash limits is the assumption that all wage setlements between November 1978 and March 1980 will be 5 per cent. and will last for a 12-month period. The cash limit is stated in both Scotland and England to be subject to review if the pace of inflation generally proves to be substantially higher than anticipated. We

are aware that negotiations are taking place on local authority manual workers' wage rates. Could the Minister be more specific about his proposals if, as is likely, we have substantial settlements?
In Scotland there have been similar complaints to those voiced about the English order. The difference is that here the redistribution is more sharp and obvious. The Secretary of State seemed to indicate that everyone was gaining. As he well knows, every single mainland regional area in Scotland except Strathclyde will suffer a loss in rate support grant next year which it would not have suffered had here not been a change in the formula. We accept that Glasgow has massive and unique problems which call for special attention but, as with the English inner cities, the answer is not to try to solve these problems by milking areas which have real problems, demands and needs.
The Secretary of State said that there were minor changes but, as my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) made clear, they are not minor. The Grampian region, one of the most efficient in Scotland, will lose £2,750,000; the Fife region, £1·4 million; the Central region, £1,250,000, and the Borders region, to which the hon. Gentleman, the Member for Berwick and East Lothian referred, £400,000, equivalent to 2p on the rates. It is strange that Berwickshire is losing the most under this order. That is not much of a prize for the hon. Member for Berwick and East Lothian and the area which elected him.
The Scottish areas which are losing most are the Borders, Grampian and Dumfries. Why are they being singled out? Are they the most inefficient authorities? Far from it. Is there less need for spending? No—Grampian is one of the growth areas. Are there wealthier ratepayers? Certainly not in the Borders—

Mr. Norman Buchan: Does not Glasgow have special needs?

Mr. Taylor: We accept that it does have special needs, which a Conservative Government will face up to, but the way to solve Glasgow's problems is not to cause damage and reduce the money available to these authorities.
We object to the orders because the changes proposed are not based on logic or fairness, in our objective assessment. Therefore, I hope that those on these Benches who are suffering from the orders and who have protested loud and long will back their words with their votes and reject the orders.

2.6 a.m.

The Under-Secretary of State for Wales (Mr. Alec Jones): I was surprised when the hon. Member for Henley (Mr. Heseltine) suggested that we should not have budgeted for the increase in local government expenditure of 1·6 per cent. which these orders include. Nor were the ranks massed behind him enthusiastic. Many of his hon. Friends have shown that they appreciate that growth even if he did not. The Association of Metropolitan Authorities, now Tory-controlled, submitted to my right hon. Friend a document called "Priorities for Progress ", in which it demanded that the Government make substantial additions to local authority spending. The hon. Gentleman seems out of tune with those Tory authorities.
Many hon. Members have said that the rate support grant system is complicated and therefore somewhat incomprehensible. I agree that it is complicated, but that it is hardly surprising since in one operation Governments are trying to compensate for the difference in the expenditure needs and the rateable resources of over 450 different authorities, with widely different characteristics.

Mrs. Kellett-Bowman: Does the Minister agree—

Mr. Jones: I am afraid that I cannot give way.

Mrs. Kellett-Bowman: I have sat here throughout the debate and I shall only take one second.

Mr. Jones: I have already reduced my speech to the bare minimum.

Mrs. Kellett-Bowman: I shall be very brief.

Mr. Deputy Speaker: Order. Unless the Minister gives way, the hon. Lady must resume her seat.

Mrs. Kellett-Bowman: It is not fair: it really is not fair.

Mr. Deputy Speaker: Order. The hon. Lady must remain seated if the Minister does not give way.

Mr. Jones: Mr. Jones rose—

Mrs. Kellett-Bowman: Will the Minister give way now?

Mr. Jones: No. I certainly do not propose to give way, having come to an agreement with the Opposition as to the length of my speech and then having to reduce it even further.

Mrs. Kellett-Bowman: Population decline!

Mr. Deputy Speaker: Order.

Mr. Jones: I want to say something about the much maligned regression analysis. I want to repeat it because hon. Members have questioned the honesty of my right hon. Friend. If they throw those stones, they should have the decency to sit and listen to the answers.
It was suggested, first of all, that regression analysis rewards the profligate authorities. This betrays a most disappointing cynicism about local government. As a whole, local authorities are responsible bodies, spending what they need to spend. The system should reward high-spending authorities, if their high spending is needed. [Interruption.] I say to those on the Opposition Benches—

Mr. Deputy Speaker: Order. Various questions have been put to the Minister. It is only proper that he should now be allowed to answer them.

Mr. Jones: The suggestion was made that an individual local authority, by spending a great deal, could increase its level of grant. No authority can, by its own spending behaviour, influence its entitlement to grant. It is only if there is overspending by a large number of authorities, with simlar economic and social characteristics, that the regression analysis could be significantly affected. There is not one jot of evidence for the existence of such a group.
The hon. Member for Henley displayed what I thought was a disappointing lack of knowledge of the intricacies of regression analysis. If he wants to criticise it, he ought, at least, to try to understand it. He misled the House because he failed to grasp the difference between the testing


and selection of factors in the regression analysis.

Mrs. Kellett-Bowman: Can I ask a question?

Mr. Deputy Speaker: Order. I must ask the hon. Lady to remain seated.

Mr. Jones: Each year's factors for testing are discussed and agreed with the local authority associations before the regression analysis is carried out. The only reasons for rejecting factors which have been previously tested are either that the local authority associations agreed that such factors were out of date or that there are better measures which can be used. Having agreed the factors to test, it is the regression analysis, not any arbitrary political judgment, which determines the selection of factors in the formula.
Whether factors are included in the final outcome each year depends upon how well they explain, in statistical terms, the pattern of expenditure. Arbitrary judgments by my right hon. Friend do not and cannot enter the picture.

Mr. Grieve: Will the hon. Gentleman give way?

Mrs. Kellett-Bowman: My hon. and learned Friend has made a speech.

Mr. Jones: I have something to say in reply to the hon. Member for Carmarthen (Mr. Evans). He criticised the rate support grant settlement for next year because of its effect on individual Welsh counties. I understand his point. No one who looks at it objectively can say anything other than that this is a fair and favourable settlement for Wales as a whole. Overall, Welsh authorities will be better off, with an increased needs element of £7 million and with over £23 million in monetary terms. This is a larger proportionate increase than for England and Wales as a whole. I can appreciate that those Welsh counties receiving less than the general proportionate increase in needs element, Powys, Dyfed and Gwynedd, will feel disappointed. We must recognise that the needs of some authorities are inevitably assessed as being, relatively speaking, lower than others compared with a year ago. Even so, I remind the hon. Gentleman that needs element payment per head for those three counties will still be above the

average for England and Wales, and for Wales as a whole—in the case of Powys substantially so. The figures are £96—

Mrs. Kellett-Bowman: Mrs. Kellett-Bowman rose—

Mr. Deputy Speaker: Order. I have requested the hon. Member for Lancaster (Mrs. Kellett-Bowman) to remain seated as the Minister is not giving way.

Mr. Jones: In reply to the hon. Member for Carmarthen, the needs element figures are as follows: £96 per head average for England and Wales, £100 for Dyfed, £101 for Gwynedd and £166 for Powys. The hon. Gentleman has suggested that Wales has been dealt with unfairly. I remind him that there are all-Welsh authorities such as the Council for the Principality and the Welsh Counties' Committee.
Many hon. Members have said that shire counties are getting clobbered again. Complaints about losses in successive years seem to start from some mystic assumption that the authorities' needs element entitlements in 1973–74were at the right level. There is no evidence to suggest that. A substantial number of shire counties containing communities with pressing social and economic problems have fared well since the present rate support arrangements were introduced in 1974–75. It is no good the hon. Member for Isle of Ely (Mr. Freud) shaking his head. I shall name them. They are Cleveland, Cornwall, Durham, Humberside, Lancashire. There are many more.

Mrs. Kellett-Bowman: Mrs. Kellett-Bowman rose—

Mr. Deputy Speaker: Order. For the third time I must request the hon. Member for Lancaster to remain seated.

Mr. Clement Freud: On a point of order, Mr. Deputy Speaker. Is it in order for the Minister to make reference to my shaking my head when you, Mr. Deputy Speaker, will not allow me to stand up and do anything else?

Mr. Deputy Speaker: Order. What the Minister says or does not say is not a matter for the Chair.

Mr. Nicholas Winterton: On a point of order, Mr. Deputy Speaker. Is it correct for the Minister to refer to another Member's county and perhaps make an inaccurate statement and not permit the


hon. Member representing that county—

Mr. Deputy Speaker: Order. The contents of the Minister's speech are not a matter for the Chair.

Mr. Jones: I was about to remind hon. Members that in the present rate support grant settlement that we are discussing, or trying to, the needs element going to the shire counties has increased by £37 million in real terms. The Association of Metropolitan Authorities issued a press release today—I remind hon. Members who represent the shire counties that the AMA is a Tory-controlled organisation—stating:
 The fact is that the problems of urban areas are growing at a faster rate than those elsewhere, Grant settlements should recognise this by increasing resources available to urban authorities.
When hon. Members say that some special punishment has been meted out to the shire counties to provide rewards for urban areas, they should discuss the matter with their own representatives who serve on the AMA.
I was asked about the domestic element as it applies in Wales and England. It was suggested that the need for the difference in the domestic element is no longer justified bearing in mind that the level of water charges in Wales has been

Division N0. 29
AYES
[2.22 a.m.


Anderson, Donald
Cunningham, G. (Islington S)
John, Brynmor


Archer, Rt Hon Peter
Davidson, Arthur
Jones, Alec (Rhondda)


Armstrong, Ernest
Davies, Bryan (Enfield N)
Jones, Barry (East Flint)


Bagier, Gordon A. T.
Davis, Clinton (Hackney C)
Kaufman, Rt Hon Gerald


Barnett, Guy (Greenwich)
Deakins, Eric
Lamborn, Harry


Bales, Alf
Dean, Joseph (Leeds West)
Lamond, James


Bean, R. E.
Dewar, Donald
Lestor, Miss Joan (Eton &amp; Slough)


Benn, Rt Hon Anthony Wedgwood
Dormand, J. D.
Litterick, Tom


Bennett, Andrew (Stockport N)
Douglas-Mann, Bruce
Luard, Evan


Bidwell, Sydney
Duffy, A. E. P.
Lyons, Edward (Bradford W)


Blenkinsop, Arthur
Eadie, Alex
McElhone, Frank


Booth, Rt Hon Albert
Evans, loan (Aberdare)
MacFarquhar, Roderick


Boothroyd, Miss Betty
Evans, John (Newton)
McGuIre, Michael (Ince)


Brown, Hugh D. (Provan)
Ewing, Harry (Stirling)
McKay, Alan (Penistone)


Brown, Ronald (Hackney S)
Flannery, Martin
MacKenzie, Rt Hon Gregor


Buchan, Norman
Forrester, John
Maclennan, Robert


Buchanan, Richard
Fraser, John (Lambeth, N'w'd)
McNamara, Kevin


Callaghan, Jim (Middleton &amp; P)
Freeson, Rt Hon Reginald
Madden, Max


Campbell, Ian
Garrett, John (Norwich S)
Mallalieu, J. P. W.


Carmichael, Nell
George, Bruce
Marks, Kenneth


Cartwright, John
Golding, John
Marshall, Jim (Leicester S)


Cocks, Rt Hon Michael (Bristol S)
Grant, John (Islington C)
Maynard, Miss Joan


Cohen, Stanley
Hardy, Peter
Millan, Rt Hon Bruce


Coleman, Donald
Harrison, Rt Hon Walter
Moonman, Eric


Colquhoun, Ms Maureen
Home Robertson, John
Morris, Rt Hon Charles R.


Cook, Robin F. (Edin C)
Hooley, Frank
Morris, Rt Hon J. (Aberavon)


Cox, Thomas (Tooting)
Howell, Rt Hon Denis (B'ham, Sm H)
Morton, George


Craigen, Jim (Maryhill)
Huckfield, Les
Moyle, Rt Hon Roland


Crowther, Stan (Rotherham)
Hughes, Robert (Aberdeen N)
Murray, Rt Hon Ronald King


Cryer, Bob
Irving, Rt Hon S. (Dartford)
Newens, Stanley

somewhat reduced under the Water Charges Equalisation Act.

Those hon. Members who followed the passage of the Water Charges Equalisation Bill through this House will have heard it spelled out on numerous occasions that the level of water charges does not now have a bearing on the level of the domestic element. The reason we have decided to maintain the present levels of domestic element in England and Wales for next year is that this is broadly consistent with one of the main objectives of this settlement, namely, to enable a degree of stability in local authority finances throughout England and Wales. To have equated the domestic relief in England and Wales would have been inconsistent with this objective. It would have put Welsh authorities under severe pressures and Welsh domestic ratepayers would have been faced with unacceptably high rate increases.

I remind hon. Members, who seem to make a great deal of this. that they should get it into perspective. The value of the 18½p domestic element to the average ratepayer in England is worth—

It being four hours after the commencement of Proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to the Order of the House this day.

The House divided: Ayes 125, Noes 103.

Noble, Mike
Shore, Rt Hon Peter
Tomlinson, John


Orme, Rt Hon Stanley
Short, Mrs Renée (Wolv NE)
Wainwright, Edwin (Dearne V)


Palmer, Arthur
Silkin, Rt Hon John (Deptford)
Walker, Harold (Doncaster)


Park, George
Silkin, Rt Hon S. C. (Dulwich)
Ward, Michael


Parry, Robert:
Silverman, Julius
Williams, Alan Lee (Hornch'ch)


Pavitt, Laurie 
Skinner, Dennis
Williams, Rt Hon Shirley (Hertford)


Richardson, Miss Jo
Smith, Rt Hon John (N Lanarkshire)
Wilson, William (Coventry SE)


Robertson, George (Hamilton)
Snape, Peter
Wise, Mrs Audrey


Rodgers, Rt Hon William (Stockton)
Stallard, A. W.
Wrigglesworth, Ian


Roper, John
Summerskill, Hon Dr Shirley



Rowlands, Ted
Taylor, Mrs Ann (Bolton w)
TELLERS FOR THE AYES:


Sedgemore, Brian
Tilley, John
Mr. James Hamilton and


Shaw, Arnold (llford South)
Tinn, James
Mr. Ted Graham.




NOES


Altken, Jonathan
Grylls, Michael
Page, Rt Hon R. Graham (Crosby)


Alison, Michael
Hawkins, Paul
Pattie, Geoffrey


Atkins, Rt Hon H. (Spelthorne)
Heseltine, Michael
Penhaligon, David


Awdry, Daniel
Higgins, Terence L.
Percival, Ian


Banks, Robert
Hodgson, Robin
Pym, Rt Hon Francis


Beith, A. J.
Hooson, Emlyn
Raison, Timothy


Benyon, W.
Hordern, Peter
Renton. Rt Hon Sir D. (Hunts)


Blaker, Peter
Howells, Geraint (Cardigan)
Renton, Tim (Mid-Sussex)


Boscawen, Hon Robert
Hurd, Douglas
Rhodes James, R.


Brittan, Leon 
James, David
Ridley, Hon Nicholas


Brocklebank-Fowler, C.
Johnson Smith, G. (E Grinstead)
Ross, Stephen (Isle of Wight)


Brotherton, Michael
Johnston, Russell (Inverness)
Sainsbury, Tim


Buchanan-Smith, Alick 
Jopling, Michael
Shepherd, Colin


Bulmer, Esmond
Kellett-Bowman, Mrs Elaine
Smith, Dudley (Warwick)


Butler, Adam (Bosworth)
Kimball, Marcus
Speed, Keith


Clarke, Kenneth (Rushcliffe)
King, Tom (Bridgwater)
Spicer, Jim (W Dorset)


Clegg, Walter
Kitson, Sir Timothy
Spicer, Michael (S Worcester)


Cooke, Robert (Bristol W)
Le Marchant, Spencer
Sproat, lain


Cope, John
Lloyd, Ian
Stainton, Keith


Dean, Paul (N Somerset)
Luce, Richard
Stanbrook, Ivor


Dodsworth, Geoffrey
Marshall, Michael (Arundel)
Taylor, Teddy (Cathcart)


Douglas-Hamilton, Lord James
Mates, Michael
Tebbit, Norman


Durant, Tony
Mather, Carol
Thomas, Dafydd (Merioneth)


Emery, Peter
Maxwell-Hyslop, Robin
Townsend, Cyril D.


Evans Gwynfor (Carmarthen)
Mayhew, Patrick
Wainwright, Richard (Colne V)


Eyre, Reginald
Meyer, Sir Anthony
Warren, Kenneth


Fairbairn, Nicholas
Mitchell, David (Basingstoke)
Weatherill, Bernard


Fowler, Norman (Sutton C'f'd)
Moate, Roger
Wells, John


Freud, Clement
Montgomery, Fergus
Whitelaw. Rt Hon William


Gardiner, George (Reigate)
Morris, Michael (Northampton S)
Whitney, Raymond


Gilmour, Rt Hon Sir Ian (Chesham)
Morrison, Hon Charles (Devizes)
Winters. on, Nicholas


Glyn, Dr Alan
Morrison, Peter (Chester)



Goodhart, Philip
Mudd, David
TELLERS FOR THE NOES:


Goodhew, Victor
Neave, Airey
Mr. Anthony Berry and


Goodlad, Aiastair 
Nelson, Anthony
Mr. John MacGregor.


Grieve, Percy
Neubert, Michael

Question accordingly agreed to.

Resolved,

That the Rate Support Grant Order 1978, a copy of which was laid before this House on 29th November, be approved.

Question put forthwith, pursuant to the order of the House this day,

That the Rate Support Grant (Increase) Order 1978, a copy of which was laid before this House on 29th November, be approved.—[Mr. Shore.]

and agreed to.

Question put forthwith, pursuant to the order of the House this day,

Division N0. 30]
AYES
[2.33 a.m.


Anderson, Donald
Blenkinsop, Arthur
Carmichael, Neil


Archer, Rt Hon Peter
Booth, Rt Hon Albert
Cartwright, John


Armstrong, Ernest
Boothroyd, Miss Betty
Cocks, Rt Hon Michael (Bristol S)


Bagier, Gordon A. T.
Brown, Hugh D. (Provan)
Cohen, Stanley


Barnett, Guy (Greenwich)
Brown, Ronald (Hackney S)
Coleman, Donald


Bates, Alf
Buchan, Norman
Colquhoun, Ms Maureen


Bean, R. E.
Buchanan, Richard
Cook, Robin F. (Edin C)


Benn, Rt Hon Anthony Wedgwood
Callaghan, Jim (Middleton &amp; P)
Craigen, Jim (Maryhill)


Bennett, Andrew (Stockport N)
Campbell, Ian
Crowther, Stan (Rotherham)


Bidwell, Sydney
Canavan, Dennis
Cryer, Bob

That the Rate Support Grant (Increase) (No. 2) Order 1978, a copy of which was laid before this House on 29th November, be approved. —[Mr. Shore.]

and agreed to.

Motion made, and Question proposed, pursuant to the order of the House this day,

That the Rate Support Grant (Scotland) Order 1978, a copy of which was laid before this House on 1st December, be approved.—[Mr. Millan.]

Question put: —

The House divided: Ayes 127, Noes 104.

Cunningham, G. (Islington S)
Kaufman, Rt Hon Gerald
Robertson, George (Hamilton)


Davidson, Arthur
Lamborn, Harry
Rodgers, Rt Hon William (Stockton)


Davies, Bryan (Enfield N)
Lamond, James
Rooker, J. W.


Davis, Clinton (Hackney C)
Lestor, Miss Joan (Eton &amp; Slough)
Roper, John


Deakins, Eric
Litterick, Tom
Rowlands, Ted


Dewar, Donald'
Luard, Evan
Sedgemore, Brian


Dormand, J. D.
Lyons, Edward (Bradford W)
Shaw, Arnold (ilford South)


Douglas-Mann, Bruce
McElhone, Frank
Shore, Rt Hon Peter


Duffy, A. E. P.
MacFarquhar, Roderick
Short, Mrs Renée (Wolv NE)


Eadie, Alex
McGuire, Michael (Ince)
Silkin, Rt Hon John (Deptford)


Evans, loan (Aberdare)
McKay, Alan (Penistone)
Silkin, Rt Hon S. C. (Dulwich)


Evans, John (Newton)
MacKenzie, Rt Hon Gregor
Silverman, Julius


Ewing, Harry (Stirling)
Maclennan, Robert
Skinner, Dennis


Flannery, Martin
McNamara, Kevin
Smith, Rt Hon John (N Lanarkshire)


Forrester, John
Madden, Max
Snape, Peter


Fraser, John (Lambeth, N'w'd)
Mallalieu, J. P W.
Stallard, A. W.


Freeson, Rt Hon Reginald
Marks, Kenneth
Summerskill, Hon DrShirley


Garrett, John (Norwich S)
Marshall, Jim (Leicester S)
Taylor, Mrs Ann (Bolton W)


George, Bruce
Maynard, Miss Joan
Tilley, John


Golding, John
Millan, Rt Hon Bruce
Tinn, James


Graham, Ted
Moonman, Eric
Tomlinson, John


Grant, John (Islington C)
Morris, Rt Hon Charles R.
Wainwright, Edwin (Dearne V)


Hamilton, James (Bothwell)
Morris, Rt Hon J. (Aberavon)
Walker, Harold (Doncaster)


Hardy, Peter
Morton, George
Ward, Michael


Harrison, Rt Hon Walter
Moyle, Rt Hon Roland
Williams, Alan Lee (Hornch'ch)


Home Robertson, John
Murray, Rt Hon Ronald King
Williams, Rt Hon Shirley (Hertford)


Hooley, Frank
Newens, Stanley
Wilson, William (Coventry SE)


Howell, Rt Hon Denis (B'ham, Sm H)
Noble, Mike
Wise, Mrs Audrey


Huckfield, Les
Orme, Rt Hon Stanley
Wrigglesworth, Ian


Hughes, Robert (Aberdeen N)
Palmer, Arthur



Irving, Rt Hon S. (Dartford)
Park, George
TELLERS FOR THE AYES


John, Brynmor
Parry, Robert
Mr Thomas Cox and


Jones, Alec (Rhondda)
Pavitt, Laurie
Mr Joseph Dean


Jones, Barry (East Flint)
Richardson, Miss Jo





NOES


Alison, Michael
Henderson, Douglas
Page, Rt Hon R. Graham (Crosby)


Atkins, Rt Hon H. (Spelthorne)
Heseltine, Michael
Pattie, Geoffrey


Awdry, Daniel
Higgins, Terence L.
Penhaligon, David


Banks, Robert
Hodgson, Robin
Percival, Ian


Beith, A. J.
Hooson, Emlyn
Pym, Rt Hon Francis


Benyon, W.
Hordern, Peter
Raison, Timothy


Blaker, Peter
Howells, Geraint (Cardigan)
Renton, Rt Hon Sir D. (Hunts)


Boscawen, Hon Robert
Hurd, Douglas
Renton, Tim (Mid-Sussex)


Brittan, Leon
James, David
Rhodes James, R.


Brocklebank-Fowler, C.
Johnson Smith, G. (E Grinstead)
Ridley, Hon Nicholas


Brotherton, Michael
Johnston, Russell (Inverness)
Ross, Stephen (Isle of Wight)


Buchanan-Smith, Alick
Jopling, Michael
Sainsbury, Tim


Bulmer, Esmond
Kellett-Bowman, Mrs Elaine
Smith, Dudley (Warwick)


Butler, Adam (Bosworth)
Kimball, Marcus
Speed, Keith


Clarke, Kenneth (Rushcliffe)
King, Tom (Bridgwater)
Spicer, Jim (W Dorset)


Clegg, Walter
Kitson, Sir Timothy
Spicer, Michael (S Worces'er)


Cooke, Robert (Bristol W)
Le Marchant, Spencer
Sproat, lain


Cope, John
Lloyd, Ian
Stainton, Keith


Dean, Paul (N Somerset)
Luce, Richard
Stanbrook, Ivor


Dodsworth, Geoffrey
MacGregor, John
Taylor, Teddy (Cathcart)


Durant, Tony
Marshall, Michael (Arundel)
Tebbit, Norman


Emery, Peter
Mates, Michael
Thomas, Dafydd (Merioneth)


Evans Gwynfor (Carmarthen)
Mather, Carol
Townsend, Cyril D.


Eyre, Reginald
Maxwell-Hyslop, Robin
Wainwright, Richard (Colne V)


Fairbairn, Nicholas
Mayhew, Patrick
Warren, Kenneth


Fowler, Norman (Sutton C'f'd)
Meyer, Sir Anthony
Weatherill, Bernard


Freud, Clement
Mitchell, David (Basingstoke)
Wells, John


Gardiner, George (Reigate)
Moate, Roger
Welsh, Andrew


Gilmour, Rt Hon Sir Ian (Chesham)
Montgomery, Fergus
Whitelaw, Rt Hon William


Glyn, Dr Alan
Morris, Michael (Northampton S)
Whitney, Raymond


Goodhart, Philip
Morrison, Hon Charles (Devizes)
Winter on, Nicholas


Goodhew, Victor
Morrison, Peter (Chester)



Goodlad, Alastair
Mudd, David
TELLERS FOR THE NOES:


Grieve, Percy
Neave, Airey
Mr. Anthony Berry and


Grylls, Michael
Nelson, Anthony
Lord James Douglas-Hamilton.


Hawkins, Paul
Neubert, Michael



Question accordingly agreed to.


SOCIAL SECURITY (MARINERS)


Resolved,


That the draft Social Security (Contributions) (Mariners) Amendment Regulations 1978, which were laid before this House on 1st December, be approved.—[Mr. Deakins.]

ST. LUCIA

2.46 a.m.

The Minister of State, Foreign and Commonwealth Office (Mr. Edward Rowlands): I beg to move,

That the draft Saint Lucia Termination of Association Order 1978, which was laid before this House on 5th December, be approved.

It is proposed that the order should come into effect on 22nd February 1979. The West Indies Act requires that any order made under the relevant section must be laid in draft before Parliament and approved by resolution of each House of Parliament.

This is the third order of its kind relating to the third associated State to move to independence under such orders. The House will recall approving the termination of association order for Dominica on 21st July this year, and that for Grenada in 1974.

Let me deal with the background to the order and of the legislation of 1967. In moving the Second Reading of the West Indies Bill on 31st January 1967, the then Minister of State stated that its purpose was to give effect to the conclusions of the conference held with certain Caribbean countries. It was decided that

the present colonial relationship with Britain should…be replaced by a new pattern of association with us. This would be free and voluntary; it could be ended by either country at any time ".—[Official Report, 31st January 1967; Vol. 740, c. 335.]

Associated statehood has served us well, but the time has come when if individual States wish to proceed to independence we should not oppose that process. On the contrary, we feel that by assuming full responsibility for their own external affairs and defence, they can re-engage in a modern relationship with the United Kingdom. This is an act not of disengagement but of re-engagement once the process of terminating the association has been completed.

The power of the Government under the West Indies Act to terminate association under section 10(2) was devised to enable either side to terminate the association. Two provisions were made. One provided, in section 10(1), for a referendum by which it was possible to ensure that if an associated State wanted to terminate the association against the

wishes of the British Government, it could do so. Also, if it wished to re-engage itself in any federal concept or any arrangement with any other territory, that, too, could be undertaken.

Section 10(2) allowed the British Government to terminate the arrangement, but throughout the discussions on the 1967 Act this was regarded as a free and voluntary arrangement and it was felt that if both sides agreed. the provision could be exercised.

Mr. Tony Durant: The Minister has mentioned a referendum in this procedure. Has that been carried out in St. Lucia? Has there been a referendum on what has been proposed?

Mr. Rowlands: No. Not only the Government of St. Lucia but other Governments in associated States have said that they do not wish to use that right, especially as the provision in section 10(2) exists where, by agreement with the British Government, the association can be terminated. I shall come back to the point about a referendum, and I think that I shall answer the hon. Gentleman's query.

Mr. George Cunningham: My hon. Friend has just used words in reference to section 10(2) which seemed a little odd. He said that that is a provision that can be used in agreement with the British Government. Everyone understands that in section 9 of the 1967 Act there is provision for agreement between the associated State and the British Government, but he will confirm, will he not, that in section 10(2) there is no suggestion that there needs to be agreement between the associated State and the British Government, which suggests that section 10(2) was intended for a situation where the British Parliament was taking action on its own initiative?

Mr. Rowlands: Yes, of course, the original Act allowed a British Government unilaterally to terminate the association. It is perfectly possible, by agreement, to use a section 10(2) procedure, and it has been used on the two occasions that I mentioned. So I do not think that the point I make is invalidated. When the concept of associated statehood was and has been that of a free and voluntary arrangement which could be terminated


by either side by a combination of procedures, if there is a common agreement to terminate by the section 10(2) procedure, that is perfectly possible and not invalid. That has certainly been so.
I think that both this Government and previous Governments have considered that it is proper to use a section 10(2) order for this purpose. The procedure has been endorsed by Parliament on two occasions, as I have said. A major reason for this is that the aim has been to try to create the best possible consensus in the process of going towards independence.
The process of referendum can often be very divisive in a small community, whereas the whole aim and purpose of British Government efforts has been to try to build wherever possible a consensus around a viable and effective constitution.

Mr. Bruce Douglas-Mann: Will my hon. Friend elaborate a little on why a referendum would be divisive in these circumstances? Also, could he tell the House whether he agrees that it has now to some extent been accepted that in circumstances of substantial or fundamental constitutional change, in the light of the Scotland Act and the Wales Act, there should be a referendum before a decision is made?

Mr. Rowlands: Let us define what we are doing. We are not making a fundamental constitutional change. That is the first point to be made. We are terminating the association where, to all intents and purposes, the State has been independent. The formal responsibilities which have remained have been for external affairs and defence matters. In practice, however, Mr. Compton or other Premiers of associated States have exercised those responsibilities themselves in a de facto sense. They attend regional conferences, they exercise in a de facto way their responsibilities as Premiers, and they have relationships with other territories.
Therefore, I think that we are formalising a process which was virtually already complete, and we are not making any massive or fundamental change. We are terminating an association. That is the first point.
Secondly, a referendum is obviously divisive in a small society. It can be extremely bitter on personal and other grounds. Personalities come into these issues in a very strong way.
If I may elaborate that point a little, I can tell the House that in all the discussions that I have had, which have now stretched over three years, the principle of independence has not been in contention between the parties concerned. It has been a question of timing, manner and method.

Mr. Sydney Bidwell: Is my hon. Friend's information that one cannot place too much emphasis on the messages coming to some of us from the island? Some of us have been there, and therefore it is natural for people to make contact with us if they have doubts about the step that is being taken. They have certain fears, but it is difficult for someone like me to unravel the reality or the depth of those fears. Is my hon. Friend satisfied that they are minimal and that an element of delay might not eradicate them?

Mr. Rowlands: My hon. Friend makes a very sensible and reasonable point. I am satisfied that those fears are unjustified. My hon. Friend also talked about a little more delay. For two and a half to three years one has been trying to allay fears and build up areas of consensus around the constitution.
The Premier of St. Lucia first raised the question of independence in late 1975. Since then we have had many discussions. The discussion of and preparation for independence have now lasted for three years. This is not a precipitate act. It is not a hasty, last-minute decision which we are trying to have approved without forethought.
I have spent three years deliberating, discussing and preparing, trying to work out wherever possible a degree of consensus. The process has taken that long because the British Government have insisted that the Government of St. Lucia, the Opposition party and many public organisations there should be fully consulted. There have been considerable discussions about the implications of independence, even though in practical constitutional terms the step itself is not a major and substantive one.


Our objective has been to create a maximum degree of consensus in St. Lucia on the question of constitutional advance. We need to proceed by the process of consultation and discussion, and we have spent a great deal of time and energy on it. I have had a number of meetings with the Government of St. Lucia and the Opposition in preparation, leading up to the constitutional conference earlier this year. We did not race or decide to bowl the matter through in an underhand or covert way. On the contrary, we spent two to three years talking, arguing and discussing.
I held rounds of talks in London in March this year with both the Government and Opposition to consider the public discussion of independence and the proposed amendments to the constitution. There were intensive talks lasting over three days. including two plenary sessions and three sessions each with the Government and Opposition alone. The whole intention of the talks this year, even before the constitutional conference, was to create the maximum degree of consensus on the way forward between the two parties.

Mr. George Cunningham: Will my hon. Friend confirm that the result of all that consultation is that the Opposition in St. Lucia, which, after all, represent seven out of the 17 seats and I think 45 per cent. or so of the votes in the last election, have asked him and the rest of us not to pass the order until there has been a referendum on the island?

Mr. Rowlands: For the whole of those two years the Opposition have been ambivalent on the question of a referendum. I have spent a great deal of time discussing the issue. Their preference has been, certainly in the past 12 months or more, for an election, not a referendum. The principle of independence has not been opposed by members of the Opposition. They perhaps disagree about the timing and method, but they do not oppose the principle.
Of course, I have not got agreement. What I am trying to say, in response to the point made by my hon. Friend the Member for Ealing, Southall (Mr. Bidwell), is that we have spent a great deal of time trying to allay fears. The fact that we have not got final and total agree-

ment is regrettable, but that is not a reflection of the amount of effort and activity that have been put in to try to build up a consensus. It is perfectly sensible to try to create such a consensus.
As a result, in the course of the discussions this year, we were satisfied that the process of consultation with the St. Lucians had been thoroughly carried out, but because even at that stage, a few months ago, a number of organisations and individuals which had made representations to the Select Committee of the House of Assembly on the independence constitution had not specifically confirmed the desire for independence, although it was implied in almost all their submissions, it was agreed that the process of consultation should be further consolidated.
As part of this process, the Government of St. Lucia agreed to publish for public discussion a draft constitution for an independent St. Lucia. I said that, subject to the outcome of all this consultation, we would be prepared—two and a half years after the initial discussion—to hold a constitutional conference.
The St. Lucian Government published about 12,000 copies of a draft constitution and 14,000 copies of a layman's guide, and a wide range of organisations and individuals submitted their comments to the Select Committee, which then tabled a further report to the House of Assembly last July. All this showed evidence of a wide measure of support for independence and concentrated, understandably, on what type of constitution and what aspects of the constitution needed revision for an independence date.
On the basis of all this information, we decided to convene a constitutional conference in July this year. I know now that there is disagreement, but a considerable measure of agreement was reached at the conference on constitutional issues. Although, understandably, the St. Lucian Opposition continued to argue that there should be an election beforehand, and claimed that there was as yet insufficient evidence that the people of St. Lucia wanted independence—they reserved their position on whether St. Lucia should be a monarchy or a republic—there were many constructive changes, alterations and amendments at the conference.
I pay tribute to members of the St. Lucian Opposition as well as to the Government of St. Lucia for the constructive manner in which they approached the preparation of a constitution that could be used for independence. Some very significant changes were made to the constitution as a result of representations from the Opposition as well as from a large number of public organisations in St. Lucia.
We concentrated on the issue of an electoral commission, the establishment of a new constituency boundary commission, and the concept of the establishment of an Ombudsman. All these features reinforce individual civil rights as well as ensuring the democratic principles underpinned and underlined by the draft constitution that was prepared.
I felt, having gone through three years of consultation—very elaborate and detailed—trying to build up a consensus, and having had a constructive constitutional conference, that when the House of Assembly requested that we terminate the association, it would be wrong for us to reject that request. To have done so would not have been democratic. It would have been the opposite. It would have meant rejecting a request by a Government who had been democratically elected, headed by a Premier who has since 1964 been involved in the government of St. Lucia, and would have overruled the wishes of a majority of the Assembly and, I believe, of the majority of the people of St. Lucia.
Having gone through this process, having spent a great deal of time trying to build up a consensus, it seemed to us that we should not reject the decision of the House of Assembly. To have done so would, I think, have created considerable conflict within St. Lucia and with the St. Lucian Government. It would have caused considerable problems in the context of the Caribbean.
We have a lot of support for the concept of St. Lucian independence from Barbados and other independent Caribbean countries. I have had an important message from the Barbadian Foreign Minister, who has recently visited St. Lucia and is working out forms of cooperation in common services, overseas representation, fisheries policy, conserva-

tion and legal services which will ensure that St. Lucia not only goes into independence but does so in co-operation with a neighbouring State, a democratic State, Barbados.
For all these reasons, I believe that it is right for us to accept the verdict which has been presented to us by the demoratically elected Government of St. Lucia. I regret that we have not been able to reach unanimity. We tried hard to do so. We must make a decision now. Has this Parliament the right to overrule the wishes of the majority of the people of St. Lucia? I do not think it has. That is why I seek the approval of the House for the draft order in council terminating the status of association.

3.5 a.m.

Mr. Richard Luce: This is an important occasion for the people of St. Lucia. We have a long history of association with that country which began, I think I am right in saying, in 1814. The country got representative government in 1924 and full internal self-government in 1967. We are now faced with this order which is designed to terminate the asssociation status. It is a very healthy sign that, despite the lateness of the hour, there is such a large number of hon. Members on both sides present on this important occasion.
It is clearly our duty to decide whether it is right for the people of St. Lucia that the order should be approved. As the Minister of State said, this must be considered against the background of the West Indies Act 1967. It is not for us to decide now whether that Act was a good thing. It is legitimate for us to discuss which was the right section of the Act to invoke on this occasion—the section that involves a referendum or section 10(2) which entitles the United Kingdom Government to introduce an Order in Council.
There are two main questions to be asked. First, do all the political parties —in this case, the two main political parties on the island—accept the principle of independence? Secondly, has the process of consultation with all the parties and with the people of St. Lucia been as thorough as could be possible in the circumstances with a view to achieving a consensus with regard to the constitution following independence?
I shall take first the principle of independence. It is well established that the United Workers Party—the Government party—led by Mr. Compton, who is a friend of this country, as indeed the St. Lucia Labour Party is a friend of this country, included in its manifesto for the election in 1974 a desire for independence. That was made plain to the people of St. Lucia. I have had a number of discussions with leaders of the Labour Patty. I have had meetings in London and considerable correspondence with Mr. Louisy and some of his distinguished colleagues. I understand that they are not opposed to the principle of independence. Therefore, the two political parties on the island do not object to independence—in fact, they want it. The only disagreement is on the question of the constitution and how the island should proceed to independence. We have the precedents of Granada and Dominica. That is the first consideration.
The second consideration is the constitution, which is important. It is the duty of this House to allay the anxieties of the Labour Party about the constitution. I have no doubt, like the Minister of State, that the party's members wish to play a highly constructive role in the affairs of their country. All the evidence suggests that this is what they have been endeavouring to do. It should be acknowledged.
Three factors need to be noted about these anxieties. The first is that a number of the constructive proposals for the constitution—the Minister of State referred to this matter—have been accepted by the Government of St. Lucia and subsequently by the British Government. I refer, for example, to the question of the Parliamentary Commissioner, the electoral commission, and the powers of the governor-general to appoint the chairman of the Public Service Commission, on which concessions have been made following proposals of the Opposition.
The second consideration is the anxiety of the Labour Party in St. Lucia over the considerable number of amendments to the constitution since the constitutional talks in London in July. I have been given a figure of 87 amendments made to the constitution since that date.
The Labour Party claims that it is not clear from where these amendments

emanate. Do they emanate from the British Government? Do they emanate from Mr. Compton's Government? It seems strange to the Labour Party that, after thorough constitutional talks in July, it should have been necessary to move so many further amendments to the constitution. I would be grateful if the Minister would explain why he felt it was necessary to make so many changes. I refer to such issues as the understanding about the state of emergency and how that should be handled, the dissolution of Parliament, and so on.
The third aspect, which is again important, relates to the outstanding constitutional issues on which the Labour Party in St. Lucia does not agree with the Government. I select two out of a number. The first is the question of whether St. Lucia should be a republic or a monarchy with a governor-general, on which the party feels there should be further discussion. Certainly the party has not reconciled its views with those of the Government.
Secondly, the Labour Party feels that it would prefer an elected second chamber, a senate, rather than a nominated one. There are other outstanding issues, but those were the more significant concerning the constitution. I should like an assurance from the Minister, if he has the leave of the House to reply, on these matters. We have to weigh these important anxieties against the clear evidence—I am trying to be as fair as possible to the Minister of State and to Mr. Compton as well as to the Labour Party—that there have been extensive consultations which began in 1975 with a request from Mr. Compton for the termination of association.
In 1976, a Select Committee was established to examine this matter and to collect evidence from the people. In 1977, there were tripartite talks and a Green Paper, and evidence was given to the Select Committee. In November that year, the Select Committee report was approved by the Assembly of the Saint Lucia Parliament and this year tripartite talks have taken place in London. The draft constitution has been published. There were constitutional talks in July after which, in October, it appeared from the evidence that the Assembly, or the majority of the Assembly, approved the constitution.
It is right to say that those discussions have been extensive and have lasted over three years. In fairness to the Minister of State, I believe that they have been very thorough.
In following the proceedings of the last few months I have made representations to the Government to delay introducing an order so as to give further time to discussing whether these differences can be reconciled. The Government responded and I know that Mr. Compton was anxious to have independence on 13th December, which is this week. I and others urged the Government not to introduce an order, to see whether reconciliation of these differences was possible. We now have the order. This is a late hour—in two senses. It is in the middle of the night, and it is also close to independence if the order goes through—with two months to go.
We are entitled to an assurance that the Minister will in the remaining period make a sustained effort to achieve a reconciliation between the two main parties. Mr. Posnett, a well-known trouble-shooter, was dispatched to Dominica to see whether he could over- come similar difficulties. Could the Minister consider something along those lines to try to overcome these final obstacles?
On the assumption that a reconciliation can be achieved—I hope that it can, for the sake of the people of St. Lucia—if they go ahead with independence on 22nd February, I hope that they can have a considerable future, particularly bearing in mind the view, which has been expressed to me as well as to the Minister by the Foreign Minister of Barbados, that they wish to undertake greater functional co-operation with the neighbouring Caribbean countries. That is an important development for that area. If there is to be growing co-operation, it has to stem from the grass roots rather than be imposed from above. Also, Britain should retain a close link with that country and the EEC, as part of the Lomé agreement, should do its best to assist.
If the Minister can give that assurance, I hope that there will be a successful conclusion, to the satisfaction of both the main parties on those islands. With that

in mind, I am sure that we will wish the people of St. Lucia a happy future.

3.18 a.m.

Mr. George Cunningham: As one who believes that, on balance, it would be preferable if the House were not passing this order, I should like to acknowledge the work of the Minister of State and the intensive efforts which have been made to reach the consensus he mentioned. I am the first to recognise that this is not a black and white case, and that there is a strong case on each side of the argument.
We should all remember that there is something undesirable about making a country independent at three o'clock in the morning and with fewer people in the House than there are in the 17-man Assembly of St. Lucia. There is something at least cautionary about passing an order to make a country independent when the British Government and some hon. Members have received messages from the official Opposition in St. Lucia, which holds seven of the 17 seats and which at the last election gained 45 per cent. of the votes, which asked us to require that the provisions of section 10(1) of the 1967 Act should be used, which would require a referendum to be held on the island, or that, if section 10(2) is used, not requiring a referendum, it should be used following a referendum, conducted, although not under the provisions of the Act, on the island. We have a firm request from the Opposition not to pass the order in this form tonight. That ought to be taken seriously.
There is something odd about making a country independent by order rather than by Act of Parliament. That is something which follows from the special status of association invented by the West Indies Act 1967. It has sometimes been said that that Act provided two possible ways of altering the relationship between an associated State and Britain. I prefer to say that it provides three ways. I do not take them in the order in which they appear in the Act. One was to be an action by the Government of the associated State confirmed by referendum in which the "Yes" vote had a two-thirds majority.

Mr. Bidwell: Forty per cent.

Mr. Cunningham: We shall not go back to other tests in referenda, but it is interesting to note that the occasion of the 40 per cent. test is not the only time anyone has ever thought that there had to be a special condition in a referendum.
The second method set out in the Act was to be by the method we are using tonight, that is by Order in Council passed by the House, not necessarily at the request of the associated State. The third way was by an Order in Council necessarily at the request, and with the consent, of the associated State. That third method was to be used only if the associated State or part of its was being combined with other countries in the area.
The question before us is: which is the method that ought to be used for an associated State to become independent? It is my submission that the intention at the time of the 1967 Act and in the discussions leading up to that Act was that an associated State in all normal circumstances, if it were to become independent, should become independent by the first of those methods—under section 10(1) of the Act—by its own action, not by British action, and for that action to be confirmed by referendum in which the "Yes" vote got a two-thirds majority.
It is not surprising that it should be said that that was to be the normal method, because the whole point about association was not just that the associated State should have control of its internal affairs absolutely exclusively, and that Britain's role, even in external affairs, should be devolvable, as it has been devolved, but that the last link with Britain should be cuttable by the associated State itself and not by any action of ours. That was the whole point of the lengthy discussions leading up to the 1967 Act. If we look back at the discussions on that Act, we find that that is borne out.
If we look at paragraphs 3 and 13 of the White Paper recording the results of the preparatory discussions, we see that it seems clearly to be reflected there that the intention is for that method to be used as the normal way. I refer also to remarks by Lord Shepherd when we were dealing with the Grenada precedent. Lord Shepherd said:

 It is quite clear, and I am fully satisfied, that all the Associated States accept the view that subsection (2) was the way out—the escape —for Her Majesty's Government and the British Parliament if they themselves wished to break the association. Section 10(1) and Schedule 2 were the provisions that were put in the West Indies Act when an Associated State itself wished to achieve full independence ".
Later in that same debate there was what one must call a more authoritative remark by Lord Greenwood. I say "more authoritative" because Lord Greenwood was the father of associated status. It was he, as Colonial Secretary, who chaired all the discussions and the like. He said:
The object of the Government at that time "—
that is, in 1967—
 and the object of the White Paper, was to enable colonies to go into independence if they really wished and if they could show that their public and Parliament genuinely wanted that independence. To this end safeguards…"—
were introduced. That is the referendum and the other procedure. Then he said:
 I am very sad…that Her Majesty's Government, in their unseemly anxiety to disencumber themselves of their imperial legacy, have not honoured the spirit and the intention of the White Paper and of the Act ". —[Official Report, House of Lords, 17th December 1973; Vol. 348, c. 36–44.]
Lord Greenwood was saying that about precisely the same choice as the Government have made in this St. Lucia case. That is the choice, to use a shorthand method rather than the referendum method. When that is said by the father of the arrangements, I think that it is a serious matter. Similar thoughts were expressed by the present Lord Chancellor when the Labour Party was in Opposition with regard to the method being used in the Grenada case.
Another consideration is that under the present constitution—the non-independent constitution—of St. Lucia if the St. Lucian Government want to alter that situation but not to proceed to independence, they have to have a referendum. If they want to alter the most important features of the constitution they must hold a referendum and get a two-thirds majority. And if they want to alter those same most important features of the independence constitution they will have to hold a referendum. There will be no alternative then, no running to the British Government and saying "Let us out of this difficulty in having a referendum ".


They will have to have a referendum or bust the constitution.
So here we have a situation in which, to make changes in the constitution—some of which could be greatly less important than independence—before independence they have to have a referendum. After independence they have to have a referendum, but to make the transition to independence itself, which, despite what the Minister of State said, is the key transition, they come running to us and the Government agree that they will use the shorthand method at half-past three in the morning, with about 15 people in the House. I do not think that one can argue that that decision can be regarded as anything but very serious indeed.
I accept that the Opposition in St. Lucia—consisting of the St. Lucia Labour Party—are not opposed to the principle of independence. However, I do not see that that is a case for not requiring the St. Lucian Government to use the intended method. If the governing party and the Opposition party are both in favour of independence, it would seem likely that in any referendum on the subject there would be a two-thirds majority for independence. So what is the problem? It would fail only if, to everyone's surprise, no doubt, a significant number of people of St. Lucia decided to vote against it. It seems that no one expects that to happen, so why should we absolve the Government of St. Lucia from the obligation to hold a referendum?
I recognise, although he did not make anything of this, that the Minister has a problem because of the precedent of Grenada and Dominica. The fact is that in the case of those two associated States we have used precisely the method that is being used tonight. I can see the difficulty for the Minister if he has to say to the St. Lucians "We used it for Grenada, we used it for Dominica, but we are not going to use it for you ". Three wrongs do not make a right, of course.
This was not a consideration in the case of the other two islands, but if it were the case on St. Lucia that because of current circumstances, or whatever, the governing party was asking its supporters to vote for independence and it turned out to be the case that the Opposition

party was going to urge its supporters to vote against it, judging by the figures in the last election there would not be a two-thirds majority for independence. That must give us cause to flap. I am not suggesting—

Mr. Douglas-Mann: It is not only a question whether there would be a two-thirds majority. At the time of the constitutional conference the Hon. Allan Louisy made a statement, in which he said:
 The Opposition wishes to state categorically that the process of consultation has not been completed. In areas where consultation has taken place the majority of the people are hostile to independence ".
This is the assertion of the leader of the Labour Party. It is by no means certain, in the light of what he was saying at that time, that there is indeed a majority in favour of it.

Mr. Cunningham: That only strengthens the case for testing the opinion of the people in the referendum, as was always thought to be necessary. I am not saying that the use of this method is illegal. I do not think that any of us is saying that at all. What we are saying is that it is undesirable and that it flies in the face of what was intended to happen in the case of an associated State. For those reasons, I do not think that we ought to pass the order tonight. My preference would be, frankly, that the Government should at least have been persuaded to withdraw the order tonight and to bring it back after the Christmas Recess, when there could have been further clarificatory consultations.
I would have been prepared to divide the House in order to achieve that objective but my understanding, from consultations, is that the Opposition are not prepared to vote against the passage of the order tonight. In those circumstances, dividing the House could only be a gesture, because there are the votes of the Government and there are the votes of the official Opposition, which will enable the order to be passed. There is no point in wasting time in a mere gesture, but I regret that it has not been possible to get enough votes to force the Government at least to put the matter off until after Christmas. As Lord Greenwood said on the occasion to which


I have referred, we seem to be in indecent haste, pushing a country to independence when there is some doubt whether the requisite majority of its people wish it.
There is no question of our saying that we are unwilling for St. Lucia to be independent. That does not arise at all. The only question is the method by which the country becomes independent. That ought to be absolutely clear to anyone who reads this debate.

3.33 a.m.

Mr. Anthony Nelson: I listened to the hon. Member for Islington, South and Finsbury (Mr. Cunningham) with considerable interest. His measured comments on the order will have contributed a great deal to the discussion on this important matter. His conclusion is a most responsible one. I am sure that he would agree that we have an important responsibility to seek as broad a consensus in all parts of the House as is possible when dealing with matters of this kind. If we decide to oppose in total or to approve in total an order that grants independence to a country, it is important that the greatest degree of support that can be shown, or not shown—as the case may be—within this Parliament for such an order should be shown. I think that that was recognised in the concluding remarks of the hon. Gentleman's speech. I am sure that the Minister will wish to deal in detail with some of the points that the hon. Gentleman has raised.
I give a broad welcome to the order. I had the honour of visiting St. Lucia last year with a number of hon. Members of this House, as part of a delegation from the Commonwealth Parliamentary Association. It is one of the values of such delegations and visits that it gives one a personal and closer understanding of the people, problems and aspirations of these countries, and enables one to contribute to important debates such as this with a little more knowledge. I certainly wish to do so on this occasion.
I do not think that anyone—certainly none of us who visited the island last year—could fail to be impressed by the character of the St. Lucian people and, indeed, with their resilience and in particular their ability to adjust to changes. The many changes that they have experi-

enced over the last two centuries have reflected their ability to adjust to changes, and the latest major change which will come with the passage of an independence order is one with which they are certainly able to cope. I for one would certainly wish them well.
As to independence, the policy that I would support is that we should not hinder the wish of associated States in the Caribbean to achieve full independence. I believe that is right both from their point of view and from ours. However, even where there is a degree of mutual acceptance of the need to terminate the status of an associated State, it is proper that any British Government should have an important responsibility to ensure that there is full discussion and negotiation of the constitutional, judicial and economic consequences of such a move, as well as an assurance that the appropriate defence and aid arrangements follow with the passage of such an order.
Secondly, I believe that there is a wider reponsibility to ensure in such negotiations that there is international, or at least to some extent pan-Caribbean, good will and responsibility for a new nation State.
Since my visit, I together with a number of hon. Members have taken a close interest in the discussion of the draft constitution and the negotiations which have taken place in London and St. Lucia. I can testify from my personal knowledge that these negotiations have been extensive. Indeed, I believe that they have been exhaustive. They have taken place in order to achieve the necessary degree of consensus.
I congratulate the Minister and the Foreign Office on the detailed work that they have put into these negotiations. It is right that we should pay this tribute. Much detailed work goes on behind the scenes—work that is often regarded as rather thankless. It is important, on this occasion, to pay tribute to that. I know the amount of work and delicate discussion that have gone on to enable this order to be brought before the House with the conviction that there has been due negotiation and discussion of this important constitutional change, and I welcome the effort that the Minister and Government have put in.
As to whether there is a mandate for independence, there seem to be three considerations. First, both the Government of St. Lucia—the United Workers' Party—and the Opposition—the St. Lucian Labour Party—are, as my hon. Friend the Member for Shoreham (Mr. Luce) indicated, in principle in favour of independence. They were in favour of it in principle when the last General Election in St. Lucia took place.
The difference lies in the process by which independence should be brought about and the process of consultation beforehand. As I understand it—it is important to emphasise this—this formed part of the General Election manifestos of both parties.
Although I am only an individual, and perhaps did not meet a representative sample, I met a large number of people, and most of them were in favour in principle of moving towards independence. There may have been difficulties and differences about the question of consultation and procedure, but the objective was broadly accepted by nearly all the people whom I met. I do not think that any of my colleagues and hon. Members who were with me would disagree with that conclusion.
Thirdly, the draft constitution was, I understand, approved on Second Reading by a majority of 10 to 6, and after Committee by a majority of nine to seven in the House of Assembly of St. Lucia. This again indicates a degree of broad acceptance within the Assembly. But, of course, this was split across party lines.
I turn to the procedure that one should adopt under the 1967 Act. Here I relate directly to the points raised by the hon. Member for Islington, South and Finsbury. This perhaps also relates to the intention behind the 1967 Act, which may not have been fully understood at the time of its passing; I do not know. If the major Opposition party of an associated State and a clear body of opinion in the country concerned opposed independence, there might be a case for adopting the procedure set out in section 10 providing for a full referendum requiring a two-thirds majority, but that is not the case in St. Lucia. Both major parties are convinced of the need to move to full independence.
The main thrust of my argument—and I suggest to all hon. Members that they should take this seriously—lis that we must resist the temptation to use the provisions of the 1967 Act to bring about a domestic political change in St. Lucia and must remain entirely objective about the question of independence. It is important that we must be seen not to be trying politically to engineer a result in the question of who should be governing St. Lucia. That is a matter for the people of St. Lucia, who must have an election within the next nine or 10 months in any case.
If we adopt section 10(1) as opposed to section 10(2), or vice versa, we risk the danger of being accused of trying to engineer a political result in the government of St. Lucia. We should resist that temptation and that is why I resist the thrust of the argument of the hon. Member for Islington, South and Finsbury.

Mr. Bidwell: One gets impressions rather than absolute determinations on a short visit to a country, and my mission was concerned with race relations and immigration. We opted out of looking too deeply into political difficulties on the island, but was the possibility of a referendum raised with the hon. Gentleman when he was in St. Lucia?

Mr. Nelson: We certainly discussed the possibility fully with members of the Opposition and the Government, and at joint meetings. As far as possible, we also discussed it with the members of the public whom we met. There was no overwhelming pressure put on me to insist on a referendum. Indeed, the Opposition party did not appear to be pressing for it at that stage.
Let us be frank. If the party balance were reversed, it is quite likely that the present situation would still apply because any political party wishes to bring its country to independence itself. We must look at the matter in isolation and not make a judgment about which party we should like to bring a country to independence. That is a matter for the country concerned. We must judge only whether the preconditions have been met and whether the time is right to grant independence.
Partly because of the precedent of using the Order in Council and partly because of the factors I have mentioned, my judgment is that the order will not imperil the prospects or the success of St. Lucia, post-independence, and will not hinder the prospects of any political parties.
I give a broad welcome to the order and I should like to pay tribute to the integrity, prospects, activity and vitality of all politicians in St. Lucia. I was impressed by Premier Compton and the work that he has done over 14 years in developing the country. Though there is clearly a great deal of work to be done and many deficiencies to be remedied, he has achieved a great deal.
Similarly, I was very impressed by the vitality and determination of many members of the St. Lucia Labour Party. In the future, clearly, they are bound, and are determined, to play a very formative role in the development of their country as an independent State. I wish them well. As for my own party, certainly I should like to feel that we Conservatives will always listen and learn and try to work with them and be sympathetic to their aspirations.
I do not believe that by passing this order tonight we shall in any way inhibit the prospects of the Opposition party or, indeed, the governing party when the election comes or when ensuing elections occur.
Because I base my arguments on objective reasons about the acceptance, as I judge it, of the need at this time for independence in the country, and the importance of not trying to engage in any political engineering as to the result—which might be the result of insisting upon the referendum provisions of the 1967 Act —I believe that it is important that we pass the order. I certainly welcome it. I think that we have a responsibility and an obligation to ensure, as far as possible, that there is a broad consensus on both sides of the House, so that the people of St. Lucia and the world at large are persuaded that we have conviction in passing such an order.

3.46 a.m.

Miss Betty Boothroyd: The hon. Member for Shoreham (Mr. Luce) was quite right in saying that

the Premier and Government of St. Lucia wished this order to be passed on 13th November. I think that that was the original intention. It would have been very pleasant if that could have occurred because, as the House knows, it is St. Lucia's national day, and the people of St. Lucia were looking for a call from this House in passing the order.
However late the hour, it is only right, on an occasion such as this, that those of us who have had the good fortune to become acquainted with the island of St. Lucia and with its people, many of whom have been involved in these constitutional talks, should speak on behalf of the island and wish its people well in the future.
In January of this year, I came back from St. Lucia, after spending a few weeks there, with a very strong impression that I have never experienced before. It was an impression of the ordinary man and woman in the street and on the banana plantations, and of their real desire for independence. Wherever I talked to them, in Castries, in the supermarket and on the banana plantations of the central plain, I found that all of them wished for independence. That included, too, the professional people. Many expatriates who have been there for many years saw the need for St. Lucia to gain its independence.
My first visit there was about 15 years ago. Before I became a Member of this House, I was fortunate enough to be able to live on the island for two or three months at a time. Life in this place does not allow that any longer. However, over the last 15 years, at any rate, I have, with one exception, visited the island very regularly each year.
I feel that I have seen some of its developments. Many of the developments have taken place slowly but surely. In one respect, I am very sorry that this debate is taking place at this hour, because I think that the developments in St. Lucia should have been mentioned. But I am sure that I should not take up the time of the House in the early hours of the morning in so doing, not only because the hour is late but, more importantly, because the domestic economy and the way that St. Lucia organises its society are not the responsibility of the British Government or of this Parliament.
The phrase "internal self-government" means what it says. St. Lucia has had self-government since 1967, so I think that I should turn to the constitutional issues which are involved. The two ways in which St. Lucia can gain its independence have been spelled out. I understand that section 10(1) of the Act has never been used by any British Government in terminating an association relationship. I understand that it is section 10(2) which is now in question. This is the mechanism which successive British Governments have used in order to grant independence.
Along with that, of course, is the need to satisfy ourselves that discussions and debates have taken place, that organisations and individuals there have been consulted, and that, after extensive consultations, termination reflects the wishes of the majority of its people. I want to try to show how, to the best of my knowledge, discussions and consultations which satisfy the conditions of the West India Act have been carried out.
The present Government have been in office since 1964, continuously for 14 years. In 1967, the present Opposition opposed association statehood for St. Lucia, just as they now oppose the method by which St. Lucia is gaining its independence. But, from the inception of statehood in 1967 and yearly since then, the speech from the Throne, which of course is the Government's programme, has contained a declaration of their intention to seek independence.
In the General Election of 1969, the Government's party's manifesto declared the party's intention to take St. Lucia into independence, preferably with one or more of the Windward or Leeward Islands group. That manifesto in 1969 was endorsed by the electorate, and the Government party was returned to office on that manifesto.
In 1970, when it became apparent that attaining independence with a federated State was not feasible, the Government, again in a speech from the Throne, declared their intention of gaining independence alone because no partners were forthcoming, and that is a pledge which is renewed annually.
At the last General Election, in 1974, the Government party again declared its

intention to seek independence and that it would do so alone. In its manifesto, it said:
 During our next term of office, we shall strive to reach an understanding with one or more of the Associated States so that we may together enter the portals of Independence and make our contribution…to the Councils of the World. If our endeavours at political unity meet with no success we shall consider going it alone if this should appear to be in the best interests of our people.
In that election, the Government party was returned with 53·22 per cent. of the total electoral vote. The Opposition polled 43·42 per cent.
So twice in General Election manifestos, in 1969 and again in 1974, the issue of independence has been a plank of Government policy. Annually since 1967 it has been the declared policy of the Government, and it has been stated yearly in the speech from the Throne outlining Government policy. There are members of the Labour Party in this country who are very concerned to see that manifesto commitments are carried out, and here is a party in St. Lucia ready and willing to carry out its manifesto commitments over many years.
Shortly after the 1974 election, there was a good deal of coverage on radio and television and through the newspapers informing the electorate about what independence really meant. This was carried out not by the Government alone but by the Opposition, who also wanted independence but made it quite clear that they did not want independence under the present Government.
In 1976, the question was put to the St. Lucia House of Assembly. The purpose of initiating that debate in Parliament was to attempt to secure the approval of the parliamentary Opposition. Although the Opposition took part in the debate and made no objection to independence in principle, at the end of the debate they refused to vote against independence, and they refused to vote in favour of independence. They simply walked out of the Chamber.
A Select Committee was established to prepare a draft constitution so that a constitutional conference with the British Government could take place. The Select Committee had as its chairman the Speaker of the St. Lucia Assembly and the leader of the Opposition was appointed


to it, as was one other member of the Opposition.
The usual notices and all the paraphernalia were sent out, and it was at that time that the Government and Opposition were first invited by the British Government—both accepted the invitation —for talks on the constitutional future. So the Opposition were represented at the initial talks and at those that have been held in the last three years.
On returning to St. Lucia, and on the advice of the British Government, the St. Lucia Government issued their Green Paper in the form of a consultative document setting out the advantages and the possible modifications of the existing constitution which, no doubt, hon. Members have seen. The Select Committee in St. Lucia did not sit until late November 1977 so as to give further opportunities for the consultative document to be considered.
Evidence was examined and witnesses were heard, but at no time did an Opposition Member attend a meeting of that Committee. They came to talks in London, but they boycotted the Committee.
In November 1977, when independence was a hotly debated issue, local elections were held in the capital of Castries. The Government party won all nine seats. Since 1969 the issue of independence has been spelled out to the people of St. Lucia. They know what they want, and in re-electing their Government in 1969 and again in 1974 the people of St. Lucia showed that they were aware of the meaning of independence. They have responded positively to that policy and have shown that they want it by this means.
We have not heard much about the Opposition's case. It is set out in a document called "The Red Book ". No doubt my hon. Friends will have read it. It can be summarised. The argument is of a purely internal political nature. One of the points made is that the history of the government of St. Lucia since the attainment of associated statehood and full internal self-government has been one of gross neglect of the fundamental needs and problems of the people.
These were the sorts of issues that the Opposition put to the electorate as a basis for opposing independence at that time. But the Opposition have never argued

against independence for St. Lucia. That is the sort of argument that any Opposition worth their salt are interested in putting to an electorate during an election campaign. It may be good material for the next election. It is the material that party politics are made of. But I submit that it bears no relation to the question whether the people of St. Lucia want independence.
One of the most distinguished people in St. Lucia, its Governor. Sir Allen Lewis, made an interesting comment in a speech last year to the youth of the island. Speaking of the move towards nationhood, he said that since 1967 they had had full control over all their internal affairs. He continued:
 The march to nationhood has been slowed while adults quarrel and complain about leadership and other domestic affairs.
I think that is right.
The argument of the Opposition refers entirely to and rests entirely on complaint about domestic affairs. It is part of a sort of ding-dong party battle which this House should not be involved in. Many of the issues raised are domestic issues for the people of St. Lucia to resolve. They already have the constitutional machinery to do so, and they have had that right since 1967. ft is not an argument which is relevant to termination of associated status.
I believe that what St. Lucia seeks tonight is the right to make its own treaties and to raise finance on the open markets of the world so as further to develop its economy and provide a better standard and quality of life for its people and an extension of its social structure.
I warmly welcome the order, and in so doing I pay tribute to the leaders of the St. Lucia Workers' Party and the St. Lucia Labour Party. I believe that all of them are dedicated to parliamentary democracy. Their involvement in the talks with the Foreign Office and in negotiations here in London have reached some area of agreement.
With all my heart, I wish all the people of St. Lucia the best in the years to come. I know that they will make the most of it.

4.1 a.m.

Mr. Bruce Douglas-Mann: In the few minutes left, I shall be brief. I remind my hon. Friend


the Member for West Bromwich, West (Miss Boothroyd) that manifesto promises should be kept, but they should be kept constitutionally. The course being taken tonight, as my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) reminded us when quoting from Lord Greenwood in the House of Lords, goes in direct contradiction to the purpose and spirit of the 1967 Act.
There is a procedure for a country to prepare itself for independence. We have had impressions given to the House as to the views of the people of St. Lucia by hon. Members who have been there. I have not had that privilege. But I have heard my Scottish friends telling me for certain how Scotland will vote in the referendum. They have been telling me both ways—that Scotland is certain to vote for the Assembly and equally that the Assembly will be rejected. We cannot know until we have held the referendum.
By analogy with the situation in Wales and Scotland —

Miss Boothroyd: Miss Boothroyd rose—

Mr. Douglas-Mann: I am sorry, but I cannot give way. My hon. Friend spoke for a long time. It is principally by analogy with the arrangements for Scotland and Wales that I feel that, in all circumstances of this kind, where there is opportunity for a referendum it should be taken.
That argument is strengthened tonight by the fact that the Opposition Labour Party in St. Lucia has addressed a telegram to my hon. Friend the Member for Islington, South and Finsbury appealing to him—and to the House—in these terms:
 St. Lucia Opposition strongly urges you to move Parliament to close the door to use of section 10(2) of West Indies Act and require provisions of section 10(1) to be used…".
I knew nothing about St. Lucia until very recently, when I received a letter from a member of the St. Lucia Labour Party suggesting that there were a number of sinister motives behind the reasons for the move by Mr. Compton to independence in this way at this time. I shall not repeat those allegations. I have no idea whether they are true or false. But they have been made to a number of hon.

Members of this House. I cannot judge whether they are true. The House cannot judge. We can judge that only by putting the issues to the referendum in the manner required by the constitution.
I, too, shall not oppose the order tonight, but I make a request regarding the use of a similar procedure in any circumstances in the future. When it is proposed to make a fundamental constitutional change—and this is a fundamental constitutional change—a referendum should be held wherever there is the machinery to do so. I hope that my hon Friend the Minister will be able to say that at least in future cases that will be done.

4.4 a.m.

Mrs. Renée Short: I was a member of the Commonwealth Parliamentary Association delegation which went to St. Lucia and other islands in the Caribbean last year. I do not wish to take very long, and I shall not repeat anything that has been said by other hon. Members on both sides, but I must say that my impression was that the whole issue of independence had been well discussed. I do not recollect that we had any representations about the holding of a referendum made to us, but we heard a great deal from the Government party about the section 10(2) possibility of achieving independence.
However, in company with many other hon. Members, I have had representations from the Opposition party. Mr. Louisy has made the following statement:
 My Party and I cannot accept that the request of the House of Assembly is equivalent to an expression of the wishes of the people, especially when the question of independence was never an issue at the 1974 general election.
In view of what my hon. Friend the Minister has said, I find it strange that Mr. Louisy should say that. I cannot imagine that the issue of independence arose only after 1974. I am sure that it was well discussed for many years before.
I want to raise the question of the electoral registration which is crucial, whether for the forthcoming election or a referendum. Members of the Opposition party put to us that many people who were entitled to vote at the last election were not enabled to do so. The following figures have been supplied to me:


there are 120,000 people living on the island; in the 1969 election 44,868 people voted and in the 1974 election only 39,815 voted. Clearly, there is a great deal to be done to provide universal adult suffrage. What has been done since the discussions began on the constitution and independence to make sure that all those on the island who are of an age to vote are enabled to do so? This is a burning issue with the Opposition. Unless apparent injustices of that kind are eliminated, they are likely to affect the whole independence issue.
St. Lucia is a beautiful island, but it has many serious economic problems. The standard of living of the working people is very poor. The average wage is about £6 a week and living conditions are appalling. Most of the people live in wooden shacks on the plantations. Whatever happens, we have a responsibility to see, through Loméer methods, that the standard of living is dramatically raised.
The Prime Minister of St. Lucia is asking for industrialisation of the island after independence. That needs to be carefully considered, because it could destroy many of the island's marvellous attributes and reduce the possibility of future development on the lines that should be followed for the sake of the people.
I hope that independence will come about. I also hope that my hon. Friend will be able to deal with some of the points that I have raised, particularly with regard to the suffrage question.

4.8. a.m.

Mr. Rowlands: This has been an interesting and important debate. I hope that nothing that I said initially encouraged the view that the matter that we are discussing is not important. It is, as hon. Members on both sides of the House have said.
I wish to pay a big tribute to the Government and Opposition of St. Lucia, to people such as John Compton, Allan Louisy, George Odium and Peter Josie, and others with whom I seem to have lived for the past three years. I have had rows with both sides. I have caused irritation, and they have irritated me. We have had tremendous arguments, but the whole process has been an endeavour

to work out the maximum degree of constructive support for a constitution to take St. Lucia to independence.
The hon. Member for Shoreham (Mr. Luce) asked whether I could give an assurance that we would still try to work for reconciliation on outstanding constitutional issues. The answer is "Yes ". The constitution is not final. Many amendments are still under discussion. This order does not terminate that discussion and the possibility of certain changes that could be made to the constitution.
Substantively, we believe that, even though we have established the areas of major disagreement, there are still probably some issues that can be resolved and that there are changes of a technical nature that can be made to the constitution almost up to the day of independence. I recall that in the case of Dominica we were changing the draft constitution up to within a week or so of independence. This order does not terminate that process.
I do not see any substantive changes being made to the constitution or any new substantive initiative on our part to try to resolve the argument whether the constitution should be monarchical or republican. We considered that issue in great detail. The Opposition themselves could not make up their minds whether they supported one or other of those concepts; they merely raised it as a question, and every other test of opinion that we took demonstrated that there was not any support to change the monarchical nature of the draft constitution.
We shall continue through the existing diplomatic contacts and channels to try to resolve a number of still outstanding issues in relation to the draft constitution, especially those of a technical nature, and where we can get agreement between the two sides we shall work for it in the remaining weeks. That process will not be terminated by this order.
I turn to the remarks by my hon. Friends the Members for Islington, South and Finsbury (Mr. Cunningham) and Mitcham and Morden (Mr. Douglas-Mann) which centred around the use of this procedure. I appreciated the manner in which they raised it. My hon. Friend the Member for Mitcham and Morden


felt that there was a balance of argument. He reverted to the question of the origins of the provisions in the West Indies Act 1967. But even the quotations that he made do not invalidate the use of this order in this case. As Lord Greenwood said, we are not talking about disencumbering ourselves, as if the British Government want to shed themselves of the responsibility. Nor are we talking about foisting on St. Lucia a decision made here.
The two provisions made in the 1967 Act were, first, for each party, if the other side was refusing to do something, to force a change upon that other party; secondly, we could terminate the association if we wished to, and there was also the right of the local Government to terminate the association.
If one has agreement, if both sides say" We are not opposed to the termination of association and mutually agree it ", it is perfectly reasonable and orderly to use this procedure. I cannot give an assurance otherwise. We have to look at each case as it comes along. It is not nonsense to use an order of this kind where, after a long period of time, one tries to devise a measure of consensus. Even if one fails ultimately, it is perfectly proper to use such an order to achieve independence. The idea of the provisions for referendum or an order was for when either of the two parties wished to terminate association against the wishes of the other. I think that that was at the heart of the provisions of the 1967 Act.
I do not think that we have done this in indecent haste or that we are doing it in any disorderly or underhand manner. We have spent a great deal of time trying to build up a consensus and agreements. I cannot give the assurance that we will never again produce an order such as this. There may well be a request from one of the remaining associated States to proceed in this manner, and we must judge the case and have the argument out as we have done in this case.
I turn briefly to the points made by my hon. Friend the Member for Wolverhampton, North-East (Mrs. Short). It has not been within the British Government's power since 1967 to change the system of registration. The system of registration has been the subject of local legislation.

There is a major registration process under way at present. A house-to-house enumeration is taking place, based upon identity cards. It is still in process. It is being conducted by the St. Lucia Government.
We wish the St. Lucia Government and people well. We halve devised a new aid package. We will provide £10 million as development aid for the implementation of priority projects agreed by the British Government and the Government of St. Lucia. The first £5 million will be on grant terms and the remainder will be interest-free loan. Thus, in a very practical, demonstrative way, we shall be wishing St. Lucia—the Government, the Opposition, and the people—well as they embark upon the road to independence. As I said in opening, I do not see independence—
It being one and a half hours after the commencement of Proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

Question agreed to.

Resolved,

That the draft Saint Lucia Termination of Association Order 1978, which was laid before this House on 5th December, be approved.

WATER CHARGES

Resolved,

That the draft Water Charges Equalisation Order 1978, which was laid before this House on 22nd November, be approved.—[Mr. John Evans.]

FIREMEN (RHYL)

Motion made, and Question proposed,That this House do now adjourn.—[Mr. John Evans.]

4.15 a.m.

Sir Anthony Meyer: The story of the seven Rhyl firemen who refused to go on strike during the firemen's dispute at the end of last year has had a great deal of publicity. I have throughout given my total support to the seven non-strikers, and I certainly do not intend to withdraw or qualify that support now. But I want to help these men, not to exploit their misfortunes for political purposes. It is in that spirit that I raise this


matter tonight. I hope that the Minister will reply in the same spirit
.
Far and away the best way to help would be to make it possible for these seven men to resume their duties at Rhyl fire station. At present it is not possible for them to do so. Since the collapse of the strike and the return to work in February 1978, the seven non-strikers, who were split into groups of two by their fire officers, have been excluded from messing arrangements, expelled from the sports club at the station, and sent to Coventry by their colleagues.
A fireman's work involves waiting around at the station for an emergency. In any kind of continuous employment, the conditions which the seven have had to endure would be intensely unpleasant. In the fire service such conditions are not bearable for people with ordinary human emotions. The consequence is that the seven have gradually been driven away from attendance at the station and have gone on the sick list. I do not know how much longer they can remain on the sick list in this way. The longer they stay off work, the more demoralised they become. On the other hand, the possibility that for one reason or another they will lose their entitlement to be registered as sick and unfit for duty could be even more damaging to their psychological well-being.
The seven bear very little resentment against their colleagues, nor even against the Fire Brigades Union, of which they are all members. Their anger is directed almost entirely towards their officers and towards the Clwyd fire authority, which, in their view, not only did nothing to prevent victimisation in breach of the terms on which the strike was finally settled but which, as they see it, made it plain throughout the dispute that it deplored the refusal of the seven to join in the strike. I can understand their feelings on this. But I must add that the attitude of the Clwyd fire authority merely reflects that of Ministers who studiously refrained from giving any encouragement or even advice to those firemen throughout the country who disobeyed the union's strike call.
This aspect of the matter has the gravest implications for the whole of the Government's future strategy. That ex-

plains why in the title of this Adjournment debate I spoke of the
 consequences for Government industrial policy ".
During the coming winter, there are certain to be strikes and threats of strikes in support of wage claims that exceed the Government's 5 per cent norm. Some of these strikes will occur in essential services such as power supplies, water, sewerage and the Health Service, involving direct and immediate threats to life and safety. What will be the attitude of the Government then? Will they encourage the workers in these essential services to obey their union call to strike? Or will they encourage those like the seven Rhyl firemen who put their duty to save lives before their loyalty to their union? This is a vast and vital question, which I am at present pursuing with the Prime Minister. I can hardly expect the Minister to be specific where the Prime Minister has so far been very evasive. I shall not therefore pursue this aspect of the matter further tonight.
Nor am I seeking to allocate blame for the plight of the seven Rhyl firemen. What I want to do, with the help of the Minister, if she will, is to seek a way out of this unhappy affair. If there is to be a lasting settlement, all parties will have to make concessions to the opposing point of view.
Let me begin with myself. I have had some hard things to say about the strikers and their union officials. If it will help in any way to secure a settlement, I will gladly withdraw those criticisms. What I cannot withdraw is my total support for the seven non-strikers until they have secured fair treatment. But it might help if the seven were to state publicly, perhaps in the form of some written declaration, what they are fully prepared to admit in private—namely, that the strikers have reasons to feel aggrieved at not receiving the 100 per cent. support of their colleagues in their forlorn battle for what they regard as a fair wage. For many years, the pay of firemen has been allowed to fall back. The example of workers in other industries or services where the health or safety of the public was at risk showed, and still shows, that the only way to get fair treatment from the Government or from local authorities is to threaten or to take industrial action.


The Fire Brigades Union has an enviable record of responsibility and moderation, and it was only after much soul-searching that it eventually decided on a strike. Those firemen who obeyed the strike call had almost as agonising a struggle with their consciences as those who decided to disobey the call. Nor does anyone pretend that life on the picket line in winter is a picnic.
In the end, the strike was a failure and the terms on which it was settled were scarcely better than those which had been on offer before the strike began. In those circumstances, it is in no way surprising that the atmosphere at the return to work should have been especially bitter against those firemen who, by continuing to attend at the fire station throughout the strike, managed to draw full pay during the dispute and yet at the end got the benefit of the rise, however unsatisfactory that rise may have been.
After such events, only good leadership could have averted the men's obsession with their grievances and persuaded them to look towards a brighter future. Such leadership was lacking at almost every level in the Clwyd fire service. To make matters worse, there were one or two individuals of a peculiarly hard and unyielding disposition who conceived it to be their duty to revive the animosity of the men towards their non-striking colleagues if ever that animosity showed any signs of flagging. If things go on like this, this awful situation can only go on getting worse. We must all pull ourselves together. I have said that I am ready to withdraw anything which may be thought to have been wounding. I have raised the possibility of the seven making some formal acknowledgment of the breach of union solidarity which they have occasioned, but the main initiative for peace must come from the side of the union and the strikers. They must now begin once more to treat their nonstriking colleagues as fellow human beings, facing the same risks to life and limb in their daily work.
The trade union officials at all levels must exert their influence not to widen divisions but to narrow them. The fire authority must cease to sit helplessly on the sidelines, giving rise to the suspicion that its sympathies are all with the strikers,

and use all its powers of leadership, if it has any, to effect a settlement. Perhaps the best way to begin would be by withdrawing the sanctions which have been imposed at Rhyl fire station on the one fireman, Alan Dyson, who himself went on strike but who has since protested at the treatment meted out to the seven and has in consequence been treated as harshly as they and subjected to the same discrimination.
I believe that everyone at Rhyl fire station, with at most one or two exceptions—but those, unfortunately, in key positions—wants to forget the past and recreate a happy and effective fire service. Men of good will in the town are taking effective steps to make this happen. I hope that the Minister will do what she can to contribute to that result. Perhaps we can give an example. Will she, from the Labour side, join me, from the Conservative side, in an earnest appeal to both sides in this dispute to work together to ensure that the people of Rhyl and district can sleep soundly in their beds at night?

4.26 a.m.

The Under-Secretary of State for the Home Department (Dr. Shirley Summer-skill): The hon. Member for Flint, West (Sir A. Meyer) has raised an important matter which has received a good deal of attention recently in the press. I thank him for giving me notice of the contents of his speech and I am glad to have the opportunity to make clear the position of my right hon. Friend the Home Secretary in relation to the events which he has described. I suggest that it will be helpful to the House, therefore, if I clarify at the outset a number of points which are fundamental to a proper understanding of the matter.
The provision of fire cover in England and Wales is the statutory responsibility of the local fire authorities—that is, the county and metropolitan county councils and the Greater London Council—which are required under the Fire Services Acts 1947 to 1959 to make provision for firefighting purposes in their areas and, in particular, to maintain a fire brigade of sufficient strength to meet efficiently all normal requirements. Subject to certain specific regulatory powers exercised by my right hon. Friend the Home Secretary, which relate to the operational efficiency


of brigades, the day-to-day management and administration of their brigades are matters entirely for the fire authorities concerned and not ones in which my right hon. Friend has any authority to intervene.
Responsibility for determining pay and conditions of service of firemen, including the terms on which they are engaged, rests with individual fire authorities. Central negotiations are, however, conducted in the National Joint Council for Local Authorities' Fire Brigades, on which the fire authorities and the fire service staff organisations are represented. The Home Office is not represented on the National Joint Council and my right hon. Friend has no power to enforce, by regulations, the conditions of service and rates of pay upon which negotiations take place in the National Joint Council. However, the Home Office ensures that the employers on the council are made aware of the Government's assessment of the implications of particular claims and negotiations in relation to the Government's pay policy, which is directed at winning the battle against inflation.
The agreement which brought about an end to the firemen's strike and a return to work on 16th January 1978 was reached by both sides of the National Joint Council. It is important to be clear about the terms of that part of the agreement which related to the basis on which a resumption of normal working was to take place. The relevant part of the agreement reads as follows:
 The implementation of this agreement is contingent upon a resumption of full normal working, without any vicimisation or discrimination by any party against individuals or groups or industrial or other buildings or premises, and upon a resumption of normal use of all fire service equipment, appliances and premises. All parties undertake to use their best endeavours to achieve this.
It is important to emphasise that the parties to the agreement were the representative bodies on the Natnonal Joint Council. My right hon. Friend was not a signatory to this agreement. Having made an agreement at national level, the representative bodies on the council informed their members of its terms. In accordance with the normal practice for implementing agreements for employees of local authorities, it was for the representatives locally—that is, the individual fire authorities as the employers and the

local representatives of the staff organisations—to implement it.
During the strike some bitter things were said and done. This was the first national strike in the history of the fire service. As I am sure the House willl appreciate, some problems were inevitable following the resumption of normal working in the fire service after nine weeks of strike action. Indeed, the hon. Member has himself very fairly referred to the feeling of grievance which the striking firemen were bound to feel against their colleagues who refused to strike. Since the end of the strike, therefore, the first concern of the employers' and the employees' organisations has been to ensure a return to stability in the fire service. It has been reassuring to my right hon. Friend that the return to work has gone as smoothly as it has done. I have no doubt that the common sense and good will which have generally prevailed in most parts of the country, together with the full implementation of the second stage of the pay settlement by the employers, has contributed to this state of affairs.
It is against this background that I should like to turn to the seven firemen at Rhyl fire station who did not take part in the strike. I understand that five of the firemen are currently on sick leave from their duties, that the sixth fireman has been posted to duties at Colwyn Bay fire station and that the seventh fireman resigned his appointment. I should explain that this seventh fireman has presented a complaint against the Clwyd county council, alleging that he was unfairly dismissed, to an industrial tribunal. I understand that an industrial tribunal sitting at Colwyn Bay began hearing the complaint yesterday. I am sure that the hon. Member will understand that, until the determination of the industrial tribunal is known, it would not be right for me to comment on the particular circumstances of that case.
According to the Clwyd fire authority, following the national agreement which provided for a return to work at the termination of the strike, the council's representatives met representatives of the Clwyd county branch of the Fire Brigades Union to discuss the implementation of the agreement in the county's fire brigade. One of the conditions sought by the


union representatives upon which they were prepared to recommend their members' return to work was that the firemen who had remained on duty at Rhyl should be divided between different watches. The fire authority agreed to divide the men between different watches. Its reasons for doing so were that it would not have been possible to form a complete watch from the non-striking firemen and the council was concerned that the brigade should return to work and provide normal fire cover as soon as possible. This the brigade did and commenced work in accordance with the national recommendation.
I understand that, subsequently, oral and written reports were made by four of the non-striking firemen to the effect that they had been subjected to victimisation and discrimination. The hon. Member has mentioned some of the incidents which took place. The allegations which were made by them can be summarised as follows. Pejorative notices relating to them had appeared on notice boards at the fire station; abusive stickers had been placed on their lockers; junior officers had acted oppressively during drills and these men had been excluded from their watch messing clubs and had been excluded also from the station recreation club.
I am informed that the fire authority holds firmly to the view that, in accordance with the terms of the settlement, it has used its best endeavours to ensure a return to normal working. All the allegations have been investigated most carefully by the chief fire officer and appropriate action has been taken in each case. Such action includes the removal of the notices and stickers, the issue of warnings to officers and other supervisory ranks as to their conduct towards the non-strikers, and measures generally designed to contain the situation. The fire authority is

of the view that the exclusion of the men from the watch messing clubs and the recreation club appears to be exclusion from voluntary organisations for which the fire authority has no responsibility. The fire authority has also kept in touch with the employers' side secretariat of the National Joint Council and has, as appropriate, sought its advice.
I hope that, in the light of what I have said tonight, it will be understood that the matters which have been referred to in this debate are not ones in which my right hon. Friend the Home Secretary or I have any locus to intervene. Any attempt at intervention by us would not necessarily be welcomed by the parties concerned. It would not be right to intervene in the day-to-day management and organisation of a brigade. This conflict in the fire service, as with any other local authority service, can be ended only with good will on the part of the employers and the trade union representatives concerned.
I am glad to know that the fire authority is still seeking further ways of resolving the difficulties. My right hon. Friend hopes that it will succeed in doing so before very long. To that end the debate tonight and the fair way in which the hon. Gentleman has spoken will, I am sure, assist both sides. I am sure that what the hon. Gentleman has said will be appreciated by both sides and by his constituents generally. As I believe that he made a helpful speech, I shall arrange for copies of the relevant extracts from the Official Report. to be sent to the Clwyd fire authority and to the Fire Brigades Union. I repeat that my right hon. Friend hopes that both sides will succeed very soon in finding a solution to the matter.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes to Five o'clock a.m.